Should a Bank use a BPO to save money over an appraisal?

By
Real Estate Agent with Godzyk Real Estate Services NH License 033394

What is a BPO? asked the Buyer. They however were told by their bank, St. Mary's Bank, that they would use a BPO to save money over a full fledge appraisal on a purchase. First a BPO is a "Broker Price Opinion" much like an appraisal when done right, but the person completing is not a licensed appraiser and must be a licensed agent. The difference is a bpo agent does not visit the comparable properties used in the report. When done right can be close to an appraisal.

 

This bpo was considered a short form where they found 3 sales and 1 current listing. The "subject" or property being purchased is a commercial condo. A free standing building, used as an office but zoned for spa, hair stylist, doctor, dentist, insurance, etc.

 

The problem started when the BPO agent did not use comparable sales any where similar to this Manchester NH area building. Yes there is a shortage of cons and yes you can use similar buildings not exact but must adjust for differences.

 

The first comp used was a an office condo in a high rise building in an airport setting. The 2nd was 7080 Sf mill building where the subject is a 1400 sf free standing building, The 3rd comp was 2 garages with a 120 sf office. Sale 4 was a down town high rise office building.

 

It is alright that there are problems, but only when they are fixed. It was obvious to everyone except the BPO agent and the bank that these comps were not similar. They used a square foot method that came up far from the market value of the subject. The income method was right on and ignored. A written response with corrections was sent to both and they refused to look at any corrections or changes therefore killing the sale, for now. Perhaps for ever, however as a good agent and well experienced person in valuations, a valiant effort will be made to fix their mess. 

 

 

The HARD TRUTH  is the BEST way to go about any home sale or purchase is to know that the consumer should not choose just any agent, choose the BEST agent for the job. My philosophy is simple, provide more personal and professional service to guide my clients through each step of the buying or selling process. All Agents are not created equal and every buyer or seller should take the time to hire the BEST not just the biggest. By using a philosophy, which is simple, to provide more personal and professional service to guide my clients through each step of the buying or selling process, I can help you find your dream home or sell your property.

 

 

                                 

It does not take magic to turn your "For Sale" sign into a "Sold" sign. It takes a full time Local Agent who specializes in Listing homes like yours.

 

 To CONTACT Scott Godzyk please call 603.661.2121 or EMAIL: Sctprop@aol.com .

 

About the Author: Scott Godzyk is the Owner/Broker of the Godzyk Real Estate Services in Manchester NH. Proud to be locally owned and operated with 30 years of experience, Scott is a leading Agent for Listing and Selling Homes in this area.We are Full Time Agents ready to serve all of your Real Estate needs with an infamous philosophy, which is simple: To provide more personal and professional service to guide my clients through each step of the buying or selling process. 

 

You can search for Manchester area Homes For Sale by clicking here. what is for sale by clicking here.

 

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate General Information
Location:
New Hampshire Hillsborough County Manchester
Groups:
"Whacked"!!!
Bananatude
Bartender, Make it a Double
Creative Solutions That Saved The Deal
Crap-Tacular

Spam prevention
Show All Comments
Rainmaker
2,719,438
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

BPOs in my experience have not been very good, but I understand the reasoning

Jan 16, 2017 07:03 AM #1
Rainmaker
2,643,127
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Banks can use them to assist in pre foreclosure, short sales and REO but on new purchases, it is not used Kristin Johnston - REALTOR® and this bpo is prime reason 1, poor results

Jan 16, 2017 07:55 AM #2
Rainmaker
526,300
Nathan Gesner
American West Realty & Management - Cody, WY
Broker / Property Manager

"If you think a professional is expensive, just wait until you hire an amateur!"

Jan 16, 2017 08:06 AM #3
Rainmaker
2,643,127
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

EXACTLY Nathan Gesner and that is what they did

Jan 16, 2017 08:14 AM #4
Ambassador
2,682,611
Anna Banana Kruchten CRB, CRS, Broker
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana of Real Estate!

BPO's as you mentioned are used with shorts and foreclosures and I've never heard of them being used for this type of sale. They'll be sitting on that property for some time - until they 'get it'.

Jan 16, 2017 08:18 AM #5
Rainmaker
2,643,127
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

I had never heard of it used on a purchase either Anna Banana Kruchten . Of course they are closed today but letters are written and sent to everyone. 

Jan 16, 2017 08:20 AM #6
Rainmaker
2,838,285
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Condo & Home Sale Specialists

Surprise, surprise...unfortunately this happens probably too often!

Jan 16, 2017 08:49 AM #7
Rainmaker
2,643,127
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Last thing we need is the bank killing our sales through a poor decision of not hiring a licensed appraiser Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400 

Jan 16, 2017 08:51 AM #8
Ambassador
2,936,174
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

BPOs, sadly, are usually conducted by agents that have not enough business, thereby lack of market knowledge.  Hence the bad results.

Jan 16, 2017 01:04 PM #9
Ambassador
2,183,222
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

It's a shame the bank's actions tanked the deal. Can you get the buyer to use another lender?

I didn't know that BPOs could be used for lending purposes. 

Jan 16, 2017 04:23 PM #10
Rainmaker
2,643,127
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Yes and no Chris Ann Cleland  . I know many BPO agents who build quite a business around bpos. It is the agents who sign up for them who have no clue how do them, how to adjust for differences or what makes a good comp compared to something that is not at all similar. In this case the bank is using a bpo in exchange of a full appraisal. They chose someone who did not know what makes a comp or how to adjust and the result is quite a mess for all involved.   

Jan 16, 2017 04:36 PM #11
Rainmaker
2,643,127
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

I did not think they could Debbie Laity , but they did. I have pieces to pick up Tuesday. The buyer will have a choice to use a new lender or hire a licensed appraiser 

Jan 16, 2017 04:37 PM #12
Rainmaker
4,612,857
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Thanks. Scott, for sharing this story. BPOs sometimes fail to meet the needed standards for accuracy.

Jan 17, 2017 08:22 AM #13
Ambassador
3,671,846
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

It works in the reverse too. I had a listing where the appraisal came in 30% over my BPO evaluation and the bank wanted me to list it at appraisal. I knew it would not sell anywhere near that and make my numbers and stats look bad so refused. Finally, the asset manager agreed and went with my price. We were able to sell and get it closed in 45 days. There were no multiple offers.

Jan 17, 2017 10:22 AM #14
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
2,643,127

Scott Godzyk

One of Manchester NH's Leading Agents
Ask me a question
*
*
*
*
Spam prevention

Additional Information