BPO's and RMV's are killing Oklahoma City Short Sales

By
Real Estate Agent with The Virtual Real Estate Team 104556

Since this is being posted on localism.com for people in Oklahoma City to read, a brief definition. A short sale is a workout negotiated with a lender or lenders, and can have a mortgage insurer involved if conventional, that sells a home for less than what it would take to pay off the debt. The lender side saves themselves from a greater loss in foreclosure, and the owner avoids having a foreclosure on their record, and minimizes the credit hit. That is the Readers Dgest abridged version. Now for a few details.

Once a contract has been sent to the lender with all documentation, and if it is an FHA or VA, an appraiser is called in to check value. It is in conventional type loans where the horror exists. Your short sale will depend on two types of evaluation, a BPO and a RMV.

The BPO is a Brokers Price Opinion. Here is the main qualifications. First, you are a Realtor. Second, you sign up to do BPO's. Third, you have the fastest finger in the west. What? Yes this is correct. When the order is sent out it is sent to many and it is first come, first served. You may have only made two sales in your life, and you qualify. You are paid very little and often it is reflected in the work. One example was in a neighborhood that was new in 2004 and only one builder. The 2005 house was sold orginally at $99 SF. Current 2009 houses were selling at $103 SF by the same builder with the same features. The BPO came in at $105 SF. Great work wasn't it. Three months later we closed it after protesting and getting another opinion. Meanwhile the seller was hanging in the wind. This year we have a house totally destroyed in the interior, and sold at $120K and that was amazing to get that. The BPO agent did not make an appointment, did a drive by, and came in at $170K. I could go on but on to the next nightmare.

A RMV is a Real Market Value. This has been explained to me without detail by a person at Well Fargo as their "staff appraisers" who have never been to Oklahoma to compare their value to the BPO, or as I like to say, the blind leading the blind. No one will tell me the exact process, but I believe it can involve looking at Zillow, or going by the taxable amount of the property. First, places like Zillow can be 30% off either way, or on the money. They do not have the time nor money to go into a detailed evaluation. Taxes are an equitable distribution of the neighborhood or area assessment. This is not a value to depend on, and some areas in the last few years vary widely on how they are dealing with this in a volitile market.  

This has got to stop. There are some really good BPO agents out there, but honestly a busy Realtor doesn't want to take the time for say $45 to do a first class job. The RMV should become more transparent and I wonder if lenders really want for us to see the man behind the curtain pretending to be the Wizard of Oz. I know that appraisers aren't perfect, but pay them a decent amount, and we will get closer to the truth. Short sales require a patient buyer willing to gamble on a long term process that may risk losing a lower interest rate on a quicker close. A seller of a short sale can even lose a job over a foreclosure in some cases. Both parties deserve better than what they are getting with the current system of BPO's and RMV's and change is necessary.

For help with short sale questions go to our website www.avoidforeclosureoklahoma.com.   

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Rainmaker
130,318
KAREN SANCHEZ
Real Living Hamilton Landon - Apple Valley, CA
...Marketing your home like no one else will.

Sorry Joe about your bad BPO.  But I can't agree with you when you say, "but honestly a busy Realtor doesn't want to take the time for say $45 to do a first class job."  

I am really busy.  Would you say that working an average of 60 hours a week qualifies? Just clarifying terms.

I do BPOs because they bring listings into the office, I don't list REOs but I sell them. It helps my broker, who also is busy and would do them if I didn't.  I do put the time and effort into a BPO so the bank has the best picture of the marketability and probable sale price of that house possible.

It really keeps me up on the pulse of the market.  I get paid for doing market research.

I feel like I have to come to the defense of people doing BPOs now and again. They maybe a necessary evil in this crazy market, but they are necessary.  If the BPOs didn't get done the shorts sales wouldn't either.  The bank does need an unbiased opinion of value.  They are what they are an opinion.  What I would like to see happen is a way for the seller's agents to be able to justify their opions of value to the bank, just the way we can meet the appraiser at the door of a listing and have comps in hand.

It's not the best system that could be in place but we have to work with what we have and support each other though it.  So you keep on listing those short sales, I'll keep on doing BPOs and selling them.  

Jan 31, 2010 01:39 PM #1
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433,697
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Thanks for the reply Karen. I am glad you take it seriously. Again from my experience you are in the minority. I meet to many BPO agents who live off the BPO's, and the faster they can get it done the better. What we make in compensation should never be a guide to our ethical behavior. Ethical behavior and competence should always come first and not be influenced by money, but sadly it is. And sadly, people are being forced into foreclosure because of shoddy work. I did acknowledge in the post the few like you who do a good job, and I also pointed out the problem at the mortgage company. With all respect to you, I would rather deal with an appraiser. That is one of the reasons that in the last year we have closed every FHA and VA short sale that got to the appraisal phase.  

Jan 31, 2010 02:53 PM #2
Rainmaker
130,318
KAREN SANCHEZ
Real Living Hamilton Landon - Apple Valley, CA
...Marketing your home like no one else will.

Hi again Joe,

I understand your frustration.  Maybe I live in a bubble, but I know many of the agents that I'm doing BPOs for.  I want to do a good job.   There are a couple of the big listers in town that do a lot of BPOs for my broker. It's to all of our advantage to do a good job, get the houses listed at a good price that will sell, not to low, not to high and to help the short sale agents get their houses sold.  This market will pass, but the work I'm doing now is a refection of who I am and I want the best reputation possible.

With kuddos to my broker, he taught me how to do a good job on BPOs and is always willing to lead a hand if I'm in a pickle. 

I agree with you, I love to hear when I have a short sale offer in that an appraisals being done. 

This market will pass, but not soon enough.

Thanks for your reply,

Karen

Feb 02, 2010 02:36 PM #3
Rainmaker
943,419
Joyce Kelley
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

We do a ton of BPOs and I hope or know that we do a jam up job. We try to go the extra mile in hopes of getting the listing.

Feb 03, 2010 08:19 PM #4
Rainmaker
592,490
Laura Giannotta
Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ
Your Realtor Down the Shore!

I've had some horrors with BPO's, and while it is probably just a few bad apples....well you know the rest! 

Feb 05, 2010 06:27 AM #5
Ambassador
433,697
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Laura, I am working on the other half of the story that is lenders and BPO companies, and the havoc they cause in the system.

Feb 05, 2010 08:41 AM #6
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Renée Burrows
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com

Oh Joe Joe Joe you so have my fur up, LOL!  You talk down about us when in fact we are probably making 2x a double ended median priced transaction that you would make.  I do not make $45 per interior.  I make well over that.

Let me address some points (you is a consistency with Short Sale agents PERIOD, not you):

Sometimes we are hired to only do some drive bys, if you write in the mls MUST SEE GORGEOUS HOME HIGHLY UPGRADED in the MLS when in fact it is barely habitable.  You also have one exterior photo in the MLS because you are so embarrassed to have your name on the listing it is such a dump.  It is listed as tenant occupied with no lockbox in MLS, when in fact it is vacant and on a mechanical lockbox that you are the gatekeeper of the code.  Not bothering to call you for a drive by.  Even Joe Pryor you admits that you take off lockboxes so that these lazy agents can't go open doors and by themselves a clue because we weren't given enough in the MLS by you.

The RMVs and AMVs I have seen, believe it or not are remarkably and scary close - like + or - 3% close (it isn't zillow!)  Like enough to make me worry about BPO business drying up AND/OR appraisers should be a little worried too!

Let me tell you a little story about clarifications:  one week about two months ago I was getting the same damn clarification "on prior BPOs performed on the property, the value came in higher, both of these reports are well supported can you tell us why you didn't choose the following comps?"  I was getting sick of these requests (which are a waste of my time) so I mentioned to them, first of all, those comps are 6 months old, my standards are that I use comps less than three months old if they are available.  SOOO I get sick of this repeated request.  I decided to take the comps they gave me as "examples" and waste a little bit of my time adjusting these comps.  GUESS WHAT, those numbers (even though they were old comps) CAME OUT to be the same numbers as me.  I "get" that sometimes there is shitty work done out there and they have left me alone with those types of requests since then.

As far as BPOs wreaking havoc they cause in the system, there is so much fraud and abuse within a short sale so there MUST be checks and balances!  There is more than one BPO ordered so the number they are focusing on may not be the one who "gets inside."  It could be the drive by number they are focusing on OR a combination of numbers plus what the investors want.

Don't forget MI that could kill it.

Too many factors to "blame it on the BPO" in a short sale.  I also know for a fact you guys don't see this.  When agents call me all pissed off and I ask them what I should adjust and where I went wrong, they just don't know.  They are taking the number the bank gave them and try to pretend they have the report in front of them.

Feb 13, 2010 03:15 PM #7
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Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Renee, this is getting to be a habit. If I blogged about all the problems in short sales it would be a 76 series of post. Maybe it is better in LV, but here it is survival of the lowest common denominator. Short sale abuse happens at all levels. For instance, I have a short sale listing that was just a bit below comps to facotr in the wait and uncertainty of a short sale. A client wants me to write a contract over 20% below the list and he will not come up one bit. I told the owner to deny the offer because it would take it off the market, had no chance of passing, and even an incompetent BPO agent could get this, yet Realtors who don't know anything will take the short sale and accept the offer. Yes there are problems throughout the process, and the BPO agent is just one of them. But why do Realtors try to do what they are not capable of or trained to do, and why aren't the lenders doing higher standards for BPO's? Since the lenders have never seen the property, I think it is a good idea to assess value on a local level. I guess I am just tired of our low entry level into real estate, and the ability of a few, and in the case of Oklahoma City, a lot of Realtors not knowing what they are doing. I got certified as an appraiser years ago not to have appraisals as a fall back position, but to be a better Realtor. This post was not to denigrate someone like you who does BPO's seriously, and uses it to keep a pulse of the market. It is those who callously don't consider that in these cases they may devastate a family's future, or even have someone lose there job like when they have a security clearance. That is why we vigorously challenge ridiculous BPO's.  

Feb 14, 2010 10:06 AM #8
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Renée Burrows
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com

OK so I wrote my post.  Therapy over.

:)

Feb 14, 2010 09:29 PM #9
Rainer
56,613
Lissa Uder
RE/MAX Next Generation, LLC - Lebanon, MO
Your Lebanon MO Real Estate Agent

The BPO is a Brokers Price Opinion. Here is the main qualifications. First, you are a Realtor. Second, you sign up to do BPO's. Third, you have the fastest finger in the west. What? Yes this is correct. When the order is sent out it is sent to many and it is first come, first served. You may have only made two sales in your life, and you qualify. You are paid very little and often it is reflected in the work.

It is my belief that the above statement is grossly inaccurate information. Most (I will admit not all) of us are highly qualified REALTOR's giving our "opinion" of a property's value based on current market conditions including recent sales and similar properties that are currently on the market.

Most (again, not all) companies send out the request for a BPO based on a score system. The agent that completes BPO's in that area with the highest score gets sent the request first. If they decline the order, it gets sent to the agent with the next highest score. This score system is based on the agent's reliability, completing the orders in a timely fashion, accuracy of previously completed orders, skill, and knowledge.

Some requests are sent to us as "drive by" orders. In this situation, the opinion of the property is greatly effected by a visual inspection of the exterior. If the exterior appears to be in good repair, the assumption is made that the interior is as well. It is noted on the completed BPO that assumption is made but a truly accurate opinion cannot be obtained without visible inspection of the interior. The lender that requests the "drive by" opinion is intelligent enough to realize that the opinion cannot be 100% accurate without seeing the interior of the home. There is no such thing as 100% accurate to begin with. You can have 3 different appraisals completed on the same property by certified appraisers and they will all come up with different figures.

Whether you hire a certified appraiser or a BPO is ordered requesting Fair Market Value, you run into the same problem. When a homeowner needs to sell their home quickly (as with a short sale) the lender should be looking for a "quick sale" value instead of fair market value. When the order is sent to the BPO agent, most do not say the reason for the request. As the BPO agent, we are not told whether it is needed for a short sale, refinance, foreclosure, etc. We simply give the "opinion" as ordered.

Most short sales do not end up on the foreclosure list because of the BPO. They end up there because of lenders that can't agree on a settlement, making unrealistic expectations for the seller and buyer.

I apologize for throwing my two cents in on a public blog, but believe the consumer has a right to understand the process. I would have commented the same if it had been members only.

Feb 15, 2010 11:44 AM #10
Rainmaker
22,046
Norma Crouse
HER Realtors - Pataskala, OH
Norma Crouse

That is so funny that you should say that because one time in a class I was taking I met this agent that made a lot of money in her area.  In the class we were discussing pricing of properties and comps and she said that she never has a problem pricing her properties because all she did was go to zillow.com and that was the price she told her clients that their home should be priced at.  Is that crazy!!  That sight is hardly ever right (at least in my area).  You don't have to worry about her doing any BPO's though because she would never waste her time.

Mar 20, 2010 05:03 PM #11
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