As a REO agent, we learn very quickly how important a good BPO is. Not only because we have to do them...along with MMR (Month Marketing Reports) but because our AMs rely on 3rd party BPOs to help them determine our list prices. Yes, you heard me correctly, I as the REO agent rarely get to list the property for the price I want. In fact, most to the time, I have to list the property at the 3rd party BPO price. So, I am trying to sell a property at a price I had no control over, my AM has no control over and yet we are held to that standard.
So, does this policy work......um, not really but sort of kind of. Figure that one out?
I understand that the 3rd party BPO prevents the AM and Realtor from fire selling the property but, guess what it also does, it prevents properties from selling. What....did I say that? Yes....oh hell yes I did. You see, some of these people doing these BPOs are working under the misconception that they have a chance to get the REO, if the price the property high. They think a high BPO suggested list price means the am looking at the BPO is going to give them a call and that AM is going to say....those two magic words, "You're hired!"
In reality, it sticks me with a list price, 10-50% above FMV because it's the AMPs policy to take the 3rd party BPO, add that to my BPO, average the two and add 5%...whiz, boom, bang, you got you a list price good buddy. SERIOUSLY!?!?!?
In fact, without naming names, without disclosing the address, I got a listing right now, it's 100% overpriced. Now, I am not saying that as a figure of speech or as an exaggeration to make a point, I literally do mean it's 100% over FMV (Fair Market Value). Now, here is the sad part...I know it's 100% over priced, my AM knows it's 100% over priced yet, neither one of us can do a damn thing about but ask for price reductions every 30 days while we both kill our stats.
So, here we are, 202 days later, it's now listed at $44,900.00 and yes, in 2 days I had 5 offers. MOF (Multiple Offer Forms) have been sent out and yes, it looks like we are going to have a deal.
Now, just a thought....but, it's a good thought, I promise. Why punish me and my AM? Why not ask yourself, "why didn't this property sell when it was listed at 95,000? We marketed this property no different than the others, in fact, we did much more.....multiple open houses, broker tours, neighborhood farm post card, email blast...etc, yet...not a single offer till we got down to $44,900.00.....maybe that's because the FMV is $44,900? Which is actually amazing considering my BPO...202 days ago suggested a list price of 49,900.
I am truly sorry to say but, I strongly feel the BPO and Appraisal industries are sham...truly a sham. Especially BPOs. Let's be clear, I understand why they are used, I understand what makes them important but, I don't believe it's any different than going down to my friend local psychic Esmeralda and asking her, how much should my house sale for.
Better yet, why don't we let AMs and Realtors determine value? I know, it's a novel idea..truly it is but, why the hell not try it, it might just work.
Comments
AMs use 3rd party BPO to make their cases when submitting for review of appraisal reports. However, I see that more than often, 3rd party BPO has little effect on the result of the review. AMs have no choice but overpricing listings. I understand that it does not make you look good. Keep in mind though, your AM knows that it's not your fault that the property didn't sell. Another thing, your AM could have asked for a price reduction if he substantiated his request. I believe seller will approve if the case is presented right.
At one time bpo's were 75 to 100, Now I see them at 40 or 45 or maybe even 50.
All thats taking them are the agents with no business hoping to make a quick 40 bucks, they can care less what they type up. I usually look them up when they call for a code and see they never sold a home in years or are new.
I recently performed an interior bpo on a home that reeked of mold due to flooding and needs a complete rehab. My value came in well below lowest sales comp of $165K. QC required I bring value at a minimum at lowest comp. Home was eventually listed much higher than that, now 60 days on market. I tried to provide my opinion but QC called the shot on this one.