Inflated BPO's Cause Problems for All

 

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.

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Jesse Gonzalez is a highly accomplished and respected real estate professional with a wealth of experience in the industry. With a career over 15 years, Jesse has established himself as a leading real estate sales and marketing expert.

As a licensed real estate agent since 2005 and a broker since 2008, Jesse has a comprehensive understanding of the complexities of the market. In 2013, he founded his firm, Liberty House Realty, LLC demonstrating his entrepreneurial spirit and commitment to delivering exceptional service to his clients.

Jesse's expertise extends beyond traditional real estate transactions. He obtained his Registered Appraisal Trainee in 2019, providing him with valuable insights into property valuation and market analysis. Although he decided to focus primarily on sales, his appraisal background gives him a unique advantage in understanding the intricacies of property values and trends.

With a dedication to excellence, Jesse consistently achieves outstanding results for his clients. Last year alone, he closed over $20 million in sales and received the prestigious Sapphire Award from his local association, recognizing his exceptional achievements in the industry.

Beyond his successful career in real estate, Jesse is passionate about education and personal growth. He is completing his undergraduate degree in Forensic Psychology, with plans to attend Law School in the fall of 2024. Jesse's ambition is to become a real estate litigator, focusing on real estate consumer protection law and advocating for the rights and interests of homebuyers and sellers.

As the owner/operator of the nation's largest social network for REO professionals, <a href="http://www.REOProNetwork.com">www.REOProNetwork.com</a>, Jesse has positioned himself as a thought leader and industry influencer. Through this platform, he fosters collaboration and knowledge-sharing among REO agents, attorneys, asset management firms, and other professionals in the field.

With a commitment to professionalism, integrity, and providing a personalized experience for his clients, Jesse Gonzalez is a trusted advisor and a driving force in the real estate industry. Whether assisting clients with buying or selling properties, he consistently goes above and beyond to exceed expectations and ensure successful outcomes.

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Comments

  • Long discussion on this topic recently. Many reasons for overpriced listings but I think the trend this last year has been for asset mangement companies to outsource their BPOs to a 3rd party who is a BPO "mill". These companies pay very little, want 2 day turn around and take forever to pay. We've stopped doing BPOs for 3rd parties-just not worth our time.
  • 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.

  • I have had the same problem for years.  It is one of the unfortunate aspects of the default servicing industry and it seems that the 3rd party BPO firms are not held accountable to that selling price.  It also happens on the short sale end, when some clown thinks he or she is going to get a listing, so they come back so high that they kill the short sale, only to have the property sell for thousands less AFTER the foreclosure process.
  • 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.

  • Sorry to disagree.  Most BPO Mills set a standard that has absolutely nothing to do with what we as real estate sales people know about value.  If you have ever done a fee BPO you know that there is a standard that they set., not the market.  They use AVM's and kick out REAL COMPS in favor of more LIKE COMPS.  I do both fee BPO's and have sold over 1000 REO's.  Often I get that same listing you had that is no where near market value and I hazard to say it has absolutely nothing to do with the back up BPO it has everything to do with a 20 something year old Asset Manager who has never sold a piece of RE in their life being controled by some phantom investor who has never heard of location, location, location. Don't be too quick to blame another agent even when the firm tells you they were the culprit in the over valuation.
  • Very interesting observation.  I've completed some 3500 BPOS in the last 4 1/2 years and have sold quite a few REOs.  I've gotten to the point where my properties typically sell within 5% of my BPO price and the average DOM for my properties is 58 days.
  • The reason the values are wrong on the BPO's is because the banks choose to pay low fees and are mostly attracting unsuccessful agents that don't have a clue how to market a property or sell a property.
  • You hit the nail on the head !!!
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