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Round 2 of the Heavyweight Fight: Calling in the Big Guns

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  1. As an appraiser, realtor, and insurance adjuster. I can say with confidence that most realtors DO NOT have what it takes to create a credible BPO. I did one BPO and swore that I would never do another one. I got paid $60 and it took me longer than doing a REO appraisal. I was in a house for over 2 hours with the electricity off in the Florida summer. It was over 100 degrees in the house and it took a long time to list all the needed repairs in this foreclosure. Most realtors are not going to have an Xactimate program to derive at a proper value for repairs. BPO’s are a joke and any lender with half a brain should know to pay an APPRAISER, that is what we have been trained for.

    But everyone wants to save a buck on the front end, then complain on the back end when it backfires.

  2. Tom Markoski

    Really NAR – your organization believes an appraisal may not be the best tool for all real estate transactions? Why is that – oh please do elaborate on that one.

    Deregulation got us to this point and your reasoning perverse. And because NAR has successfully pushed BPOs – they now claim that they are widely accepted in the real estate industry…Really Nar?

  3. Retired Appraiser

    Here is my concern.

    An appraiser is required to spend a minimum of 2 years training for subminimum wages and have around 4,000 hours of experience to become licensed in valuation.

    A realtor is not required to have 1 hour of experience in valuation and yet they can complete a BPO for a lender.

    How is it again that Realtors feel that they are qualified to do BPOs for lenders?

  4. Retired Appraiser

    Here is a compromise that the NAR should consider:

    *Allow Realtors to do both BPOs and appraisals with no appraisers license.

    *Allow Appraisers to sell real estate without a real estate license.

    The obvious point is that the license and required training is in place for a reason (to protect lenders and borrowers). It’s ridiculous that agent think they have a right to value property just because they’ve been shown how to spend 10 minutes pulling a number out of the air.

    If we’re going to blur the lines guys, let’s make it a threesome and cross over onto the auctioneers turf as well. Why shouldn’t we?

    Get real folks…and consider the end client’s needs for a change.

  5. TerrBear

    Part of the problem we are experiencing with appraisals is out-of-the-area appraisal mills sending in appraisers that do not have an understanding of the local market. These appraisers are working for a fraction of the normal appraisal fee and the quality of the report shows it. Also, the fee paid for BPO’s has become ridiculous. Agents are now paid between $45 and $65 for an interior BPO with exterior BPO’s paying $20 to $30. Does anyone think they are going to get a quality valuation for that amount of money? Both agents and appraisers are forced to do more reports for far less compensation.

    Real estate agents are qualified to give an opinion of value for the homes in their market. Appraisers and agents are all using the same pool of data and the numbers should not be that far apart if both parties are doing their job correctly. Both appraisals and BPO’s are subjective so there will be variations.

    Finally, I think the real argument is about the money. If home sales were back at the previous levels of 2003-2006, we would not even be having this conversation. Appraisers would be busy doing appraisals for new mortgages and agents would be busy doing valuations for Sellers.

    The whole system is completely gummed up do to the overwhelming volume of bank owned and short sale properties on the market.

  6. Appraiser & Broker

    As an active appraiser and RE broker, I have had the opportunity to review side-by-side BPOs and appraisals done on the same properties for a major, national company in the mortgage field. There are alway exceptions to the rule, but what I observed is that REALTORS do not have a working understanding of the use of adjustments in obatining a current value opinion. It is not difficult to report an MLS sales price; however, determining what adjustments are needed and how to apply them makes the difference between a credible value and one that is not credible for its intended use. Many other factors are involved, but the lack of skill in this one area pretty much makes a typical BPO of no real value.

  7. AS A MEMBER OF THE APPRAISER SECTION OF THE NATIONAL ASSOCIATION OF REALTORS, I AM REALLY ANGRY AT THIS RESPONSE. HOW CAN A “BLOATED PRICE OPINION” POSSIBLY BE A REASONABLE SUBSTITUTE FOR A CERTIFIED APPRAISAL?
    I AM NOW VERY CONCERNED WHY WE EVEN HAVE AN APPRAISAL SECTION. DENNIS MCLOUGHLIN, RAA GREENSBORO, NC

  8. NAR has absolutely waged war on the appraisal profession this week. Not only do we have the promotion of BPO’s, but we have the construction of a mass NAR/LPS AVM database in the works.

    Jon Nordquist

  9. Realtor

    I have been a Realtor for 9 years. I have completed over 1000 BPOs over the past 18 months. ‘I” feel well qualified to give an approximate value of a home.

    However I generally believe that as a whole Realtors BPO’s are inferior to an Appraisal. We don’t really have valuation training. I have had to explain why my values differ from other Realtor BPO’s on many occassions.

    We spend less time in the home. No drawings. No major requirements other than shooting every room and visible damages. We dont measure; just stick to the tax record regardless if theres a Certificate of Occupany. Little diligence. Make chump change.

    With that said we are reasonably likely to choose similar comparables as Appraisers. However with little requirement for valuation training we cant compete with Appraisers (out of area Appraisers may be an exception).

  10. Jill Connolly

    As an appraiser, I can confirm the BPO’s are flawed, in more ways than one. I do reviews of BPO’s for one of the major AMC’s that reviews for the lenders. One recent review that came across my desk, was for a client who’s property was located on a residential street in an average neighborhood. The realtor’s BPO over valued the property an average of $50,000 higher than sales within the neighborhood. The broker used 2 sales on deepwater ocean accessible sites, (superior to the subject) and 1 sale in a superior neighborhood with a superior pool (the median price of the neighborhood from MLS statistics was $40,000 higher, then the subject’s neighborhood.) The BPO came from a client that was arranging a short sale with the lender, who ordered the BPO, and the value differed from the appraisal I provided for the client. I submitted my findings to the client, whom forwarded the results to the lender, along with a statement that I was on the review panel for the company who ordered the BPO to begin with, and stated the Broker should be removed from the panel for further work. The lender’s response was to order an additional appraisal, which confirmed my original appraisal value. The AMC that order the BPO review, sends the reviews to any appraiser in any part of the country for review. If I had not known the neighborhood, that BPO would have passed a review by the AMC, with a inappropriate value. The reviews sent to me by the AMC were for appraisals in California, ( I am located in Florida) which I quickly declined performing the work, stating that I was not qualified to review, without proper knowledge of the area. The original AMC company representative, said I should do the BPO reviews anyway, and not “read too much into them”, because they were not appraisals. What does that say for the BPO and the system which they are being processed, and for our nation’s economy and the already fragile real estate market? The process is obviously flawed and the BPO’s are misleading and are simply side stepping the hard working appraisers that trained for years to a quality job. It is all about money to the lender’s. The new system of HVCC is a farce also. The AMC are simply taking 1/2 of the appraiser’s fees and pressuring them in other ways by applying time restraints, limiting the quality of the work that can be performed within 24 hours of the inspection (otherwise the appraiser will not receive any further work). There is a much better way to do business and do it correctly, in my opinion.

  11. Joanne

    Hey…
    I’m an REO realtor…..I’ve got a thought….I saw the writing on the wall 4 years ago when appraised values on properties were nuts. If appraisers did a true appraisal and didn’t make the appraisal work maybe we wouldn’t be in the mess we are in. I have talked to many appraisers and they all say the same. If we don’t appraise it we won’t get the bank’s work. Someone should pass a law that no appraiser gets a copy of the contract. Every appraisal should be a true appraisal. And for those banks that put pressure on appraisers to appraise the property at the sales price…..shame on you…you deserve to be in the hole your in. If realtors did their jobs and appraisers did their jobs and the banks listened to the professionals we would not be in the mess we are in. And to think at one time nit so long ago banks wanted to be able to sell real estate. Thank God someone put a stop to that idea…..

  12. Chris

    There are many skills in salesmanship, contract negotiations, and marketing that would benefit from competencies expected of a REALTOR. Those skills and expertise dominate a REALTOR’s time. The skills demanded of an appraiser are also specialized requiring years of education and supervised full time experience that most REALTOR’s cannot and do not want to bring to bear.

    NAR insults REALTORs by demonstrating ignorance and incompetence in their position on BPOs. It is as shameless and humiliatiing to professional REALTORS as the pathetic REALTOR position against point of sale energy efficency ordinances. Competent agents and appraisers know that specific, unique, and measureable benefits from energy efficency improvements do enhance value and reduce both the cost of and risks of homeownership.

    It is only the self serving REALTOR who avoids POS in the same way REALTORs steered borrowers away from FHA for decades in favor of the fiasco that crushed our economy and now leaves FHA as virtually the only choice

    Shame on NAR yet again!

  13. Victor I.

    BPO “Broker Price Opinion” Is just that “An opinion of value”. If we are to follow the reasoning of the appraisers we should have an appraisal every time we list a property. When all they do is go into our MLS system and pull the same comparables that we look at and come up with the value suggested by the available sold comparables. Realtors are the ones in the trenches making these deals happen and no one has a better idea than we do on what the market trend is indicating. I cant remeber how many times I have had appraisers call me to ask me information on my listings and what they are in escrow for. We can do valuations for our sellers but we cant do valuations for other clients for a small fee. Come on guys! Whats this really about? “Some of us might of been born at night but not last night”

  14. Robert

    First, I am not an appraiser.

    Second, I have probably done over 2000 BPO’s.

    Now, when I did a BPO (and I don’t do them any more), it was on a property where I had the opportunity to get a listing. The difference between getting a listing and assisting in determining value for a loan modification however is light years apart.

    If I get a listing for which I did a BPO, the accuracy of that “opinion” is tested in the fire of the open market.

    If I assist a seller, or a lender, in getting a loan modification using a BPO, there is no “testing” of the “opinion.”

    Also, if BPO’s are allowed to assist in loan mods, are we not one short step away from going back to AVM’s for the determining of value for a purchase mortgage, and of course we all know that an AVM commoditize a piece of real estate instead of allowing it to be valued for its unique characteristics (and it is the unique characteristics of real estate that differentiates one home from another giving it value).

    One of the compelling arguments against HVCC is the undo pressure on the independent value determination it has supposed to created. If the NAR can see how this has happened under HVCC, I am certain NAR can see how a BPO, untested by the fire of the market, can infringe on the independent determination of value needed in a loan mod.

    Now if a lender wants to get a BPO when it is considering a loan mod, or someone with a mortgage wants to submit one as an indication that a mod is in order that is one thing. However, an independent fee appraisal from a disinterested third party is the best path of insuring sound lending practices in real estate, both for loan mods and with regard to HVCC.

  15. Candy Cooke

    BPOs might be alright if our Realtors got the proper training and followed the Code of Ethics. Article 12 and its Standards specifically address this issue. Under Standard 11-1, other than in pursuit of a listing or to assist a potential purchaser in formulating a purchase offer, a Realtor must include certain information.

    How many of our Realtors actually understand that? Maybe we need more education on this.

  16. Candy Cooke

    That should be Article 11, not 12.

  17. Has anyone considered who is watching all of this and laughing all the way to the bank? This was their plan all along; having agents, appraisers, and AVM’s all in the mix together, each touting their services are better. Who is going to win? AVM’s will be the short term winner. Big Banking wants to drive appraisers out of the mortgage lending industry. They are the only unbiased participants in the mortgage process. Lenders hire appraisers to give them an honest, unbiased, opinion of value. But, what they really want from the appraiser is a “form to make the deal work.” There’s no concern over the actual value of the collateral at the local level. Lenders/Banks sell the loan in the secondary market, make their quick profit, and move on to the next “extremely well qualified” buyer they can find these days. The ultimate investors who relied on big banks and Wall Street suffer the most losses. Well, the second most losses. The biggest loser is the American Consumer! Do you really think banks tried to get appraisal fees lowered to be nice to their customers? They did it for one reason only; so they could get a piece of the profit. Big banking is working hard to get consumers used to hearing the terms appraisal, BPO, and AVM synonymously. Once that is completed, lenders can get appraisers out of the process, hire their own brokers, and then they can have their way. The appraiser is the only one in the mortgage lending industry who truly has the consumer’s best interests at heart. And they’re being rewarded for their hard work by being the only ones with their jobs turned upside down, being blamed for much of the housing crisis. The appraiser did not inflate any appraised value without motivation. ** Remember that big banks wanted to get into the real estate business? Once they get appraisers out of the way, who do you think they’ll come after next? Appraisers are just one more victim of the real estate crisis.

  18. NAR has thrown the appraiser under the bus, backed and ran over him or her twice. I am a licensed Broker as well as a Certified Residential Appraiser witrh over 25 years experience. Real estate agents are not qualified to value properties for such transactions. I perform 2 -3 appraisal a month for agents that want to establish a lisitng price for properties. I just got through appraising an agents personal house in order to help him establish a listing value. Appraisers have hundreds of hours of training and required educastional classes in property valuation. Real estate agents can take a week’s worth of classes, get licensesd an start performing BPO’s. Give me a break! BPO’s are one of the many factors that lead to the current housing crisis we are currently facing. NAR should be ashamed of it’s self, I know I am!

  19. Florida Appraiser

    I pay dues to this organization every year as an appraiser to be a realtor member. I have done so for the past eight years. I feel like we have become the red-headed step children. In the end, it boils done to fast and cheap, which is what got us in this mortgage mess to begin with. What happened to wanting accurate, quality work? Don’t get me wrong, there are many realtors who are qualified to do BPOs, however, why would they work for these low fees? The reason…they are going to get something in the end…the listing! With that said, how can a realtor be unbiased and objective if they have an interest in the property? That is why we have appraisers!

  20. In all of my 25 yrs of Real Estate & Property Tax Reduction I never seen such crazyness with appriaisals in the last few years. It can’t get any worse. Almost every appriasal Ihave seen or looked at had some flaws in it. This is wide spread, more than Half of the time I would of used different comps not only to increase the value of the subject but also to decrease the value of the subject. Incorrect adjustments, ignoring the gross/net difference % rule or what ever. I personally have had a 1/2 dozen appriasals done on my home, each one has a different sq footage amount on it. By Defination “Apraisal” is a value of Opinion. Top producer realtors are in the trench’s more than appriaser’s. By many appraiser’s own admission the have alot of latitute or discression with the value in their work. I am sure if NAR have realtors to do this kind of work that they should be required to take so many hours to get class room credit for it. I AM FOR REALTOR’S to accept this opportunity to show off these skills that most of us do have . Matter of fact before licensing was required 18 yrs ago I did a few appriasals on my own. Now you have to be licensed and look what mess we are all in !

  21. Beau

    When did BPO’s start and who originated it? After reading some of the comments, I can’t help but wonder why the BPO came into existence. After all, it is called a BPO (Broker price opinion) not an APO.
    If it’s just a tool for lenders to save money, then I have to agree with most of the points being made here……An appraiser is much more qualified! I look at it like this…….should a buyer get a certified home inspector to inspect the property he/she is planning to buy? or get Uncle Jack who happens to know a lot about construction? Well, my recommendation would always be the inspector, however it’s possible Uncle Jack may do okay and save the buyer some money.
    On another note, I have also noticed since the appraisal legislation change last year that we are getting less qualified appraisers coming in from outside the area that really aren’t familiar with the trends of certain local markets and are producing lousy appaisals which are then causing deals to fall apart (that shouldn’t).
    I think there are problems on both sides we didnt use to see much of……..the more big government steps in……..the more it seems to murky up the waters and cause havoc!!

  22. I have had a few short sale/pre-forclosure listings, each time the bank sent in an appraiser, their value was on the top end or around at the selling price that we got. Each class I have ever attended on pricing out a short sales is 10 % below market value. Who is correct here ?????
    I personally think that in a down market, that the 10 % below market should be the standard rule of practice. This should get the most results for your client,but after thinking about fidutinary relationships with the bank for a BPO is this acceptable ? I don’t know !
    Maybe under your reconsilation you should note this 10 % below market value rule that we were taught and let the bank to decide on this ? See an appriasier would never bring this info into light and 10 % can make or break a deal. As you can see I have a degree in this area of practice of short sales, foreclsoures & Reo’s.

  23. Let me take back about this 10 % observation rule comment for a minute, in most recent year or two I have seen time adjustments as part of the appraial ,I don’t know how they determined on what % timeline each city should be adjusted downwards. May be there are some published guildlines some where but are they accurate enough to use in all case’s ? I will admitt that in 2008 with the least amount of sales on record for 25 yrs that was a very hard year to do accurate appraisals. Even by todays standards in some area’s its very hard to give an honest CMA value. I will be the first one to admitt this becuase I am honest enought to do so.My home was valued 4-5 yrs ago at $810,000 now I have it listed at $489,000 with still no showings. How can anyone make any sense out of this whether it is an appariser or a Realtor we are all in the same boat.

  24. Using the information that you have on hand from realiable resources are no longer acceptable standards;
    Whether it is Sq footage or price valuation from the local resources don’t often get it right ,Trust me I know first hand since I have helped thousands of tax payers over 25 yrs in reducing their property tax’s when I worked for Cook County.
    If anyone does property tax appeals they will see that in the last year or two, the huge price valuation differences between the Local Assessor & the actually value of the property in alot of case’s. The Assessor has not reduced quickly enough or full heartly accepted Short Sales or Foreclosures in its data base,so there is a higher level of value through out most area’s of the ILLinois except noted in Cook County where the Assessor has instituted this type of appeal to be considered. We are still years behind the eight ball with getting the proper values of our homes put on them for taxation. Take for example my home. 4 yrs ago I did get an appraisal for $810,000 but I fought the local Assessor when they wanted to put a value of $769,000 on my home 3 yrs ago I got it down to $725,000. 2 yrs ago I got it down to $700,000 & last yr I got it down to $640,000 even though I fought to have it reduced to $500,000. Now I have my home listed at $489,000 and no showings while the assessor has the value of $640,000 on it , I am filing an appeal with the state of IL for further reductions. This is very common all over ILL and I bet America. Everything is out of wack & I trust myself as a Realtor to know and correct these flaws then anyone else. This can’t get any worse !! Let the Realtor do there job whether its a CMA or a BPO most of us that have short sale/pre-forclosure listings know all about BPO’s and have done them. I don’t see what the big deal is here. I submitt them already as part of the package to the bank.

  25. Dan Coffey

    What a silly fight.

    At a time whem we have tremendous problems getting appraisals that banks will accept and we need each other other’s competencies like never before, we pick a fight.

    How dumb is that..

    In thoery , a BPO is certainly better than a AVM. An appraisal should be better than a BPO and immensely better than an AVM. But the accuracy required may be satisfied with the AVM.

    A good BPO by someone active in the neighborhood may well be better than an Appraisal by a licensed appraiser without a high level of local geographic competence.

    Competency is the issue. Not the type of license. The BPO follows the same three methods of ascertaining value that an appraisal does. Otherwise it should be rejected.

    Let’s just get back to selling real estate and getting loans approved for good buyers.

    Dan

  26. Paul Bartoletti

    I have been a Real Estate agent for some time and I have notice glaring deficiencies on both sides. I have seen appraisers compare owner occupied homes in very good shape to comps that were stripped foreclosures with no adjustment made for condition. The appraiser would have had to taken the time to look at the comps to draw an adequate conclusion. If you look at the MLS you will see that some agents just don’t put the time or effort into complete information and they apply the same effort to the BPOs they create. Appraisals are historic in nature and to some degree will always trail the market as do the BPOs. I would not throw out the process of BPOs because some are done poorly and I would not suggest that appraisers could be replaced with an 8 ½ X 11 sheet of paper with formulas on it because the author did not do their due diligence. They both have valid applications and should be checked for accuracy. Appraisals and BPOs do not cause fraud. People with poor ethics cause fraud and we should work to remove those offenders from our industry that do damage to its credibility. It should be forced responsibility, as it is in short supply these days having been replaced by greed.

  27. Bob Long

    I have done BPO’s. The amount of time to do a good BPO does not even come close to providing a good return financially. I know of agents who pump out 4 to 6 BPO’s a day and there is no way they are doing the due diligence required to provide a decent product. There are agents who give inflated BPO’s thinking that they will get the REO listing from a lender because they think the values they give a lender will impress.

    I know from experience because I had a buyer(on one of my listings) for a house in a neighborhood that the highest value that had sold in the last 3 months was $615,000 (a similar house in excellent condition). The house I was selling needed approximately $30,000 worth of repairs to comp with the other home. The BPO came in at $745000. The lender rejected the $600,000 offer as too low and would not negotiate but took it to the trustee sale. It is now on the market for $550,000 as an REO.

    It is not a good justification to say untrained real estate agents are doing as good a job as appraisers did a few years ago . We also have those among us who have a conflict of interest when it comes to BPO’s.

    We are now carrying the water for the lenders when we do $35 exteriors and $50 exteriors.WE Agents are sometimes our own worst enemies. Groveling over the crumbs that the lenders throw out hoping for that coveted REO listing!

  28. I’m a member of NAR and the National Association of Independent Fee Appraisers.
    NAR, needs to stand behind the appraisers on this issue!! Just look at the difference!!
    Currently, we have two classes of appraisers in our state. They are;
    1. Indiana State Certified Residential and Certified General Appraisers. The current requirements and qualifications (as of 2008) are
    a. 200 or 300 hours of specialized appraisal training with about 13 separate examinations over the course material.
    b. At lease a 24 or 36 month apprenticeship period with a supervisor co signing every assignment. The 24 month apprenticeship period is for residential appraisers and the 36 month apprenticeship is for commercial appraisers.
    c. An Associate’s Degree from an accredited college or university for residential appraisers and a Bachelors Degree for commercial appraisers. There are alternatives to the college degrees but they are actually more difficult to obtain than a degree.
    d. A comprehensive examination administered by the State of Indiana. This examination is four (4) hours long for residential appraisers and eight (8) hours long for commercial appraisers.
    e. There is a Continuing Education requirement of 28 hours every two years. This CE must be focused on appraisal topics.

    2. INDIANA Real Estate Brokers. The current requirements and qualifications are;
    a. Be 18 years old.
    b. Take a 54 hour class focused on real estate sales to get the salesperson license and then a 54 hour class focused on real estate sales to get the brokers license. There is some discussion of appraisals in the broker course but it prescribed by the state to be limited to
    c. Been a real estate salesperson for one year.
    d. Pass a test focused on the sale of real estate to get the salesperson license and then again to get a brokers license.
    e. There is a Continuing Education requirement of 16 hours every two years. This CE is usually focused on sales work not appraisal.

    Here are the education requirements for real estate salespersons and brokers. Please notice the required topics and how they relate to appraisals.
    This requirements for salesperson and brokers only include five (5) hours of Real Estate Valuation training. Essentially this means, the licensed or certified appraiser has extensive training in all phases of the appraisal of real estate (200 or 300 hours of classes plus the degree) but the real estate broker has only five (5) hours of “Real Estate Valuation” education. The real estate broker is not even required to take an ethics and rules class which is required for appraisers and updated every two years.

    The current law makes the real estate broker on par with the licensed or certified appraiser despite the disparity in training and experience. The only limitation imposed on broker – appraiser is the inability to do appraisals for banks, savings and loans and credit units where the loan amount exceeds $250,000. This limitation was imposed by the Federal Government because of FDIC insurance. In most communities in Indiana, this is not a restriction at all.
    NAR, you need to help stop BPO!! I believe you are helping protect a small percentage of Real estate people. A LITTLE COMMON SINCE FROM WHAT YOU READ ABOVE!
    REGARDS
    JOHN

  29. Candace

    People…it is not rocket science when you are doing a BPO! If you can’t give the proper value of a home and all the information that goes along with doing a BPO, maybe it is not the business for you! I have seen some poor apprasials over the years…I wonder where they got their training? Education is the key. We are all in this together…let’s act like it! People need to maitain their objectivity…

  30. Chris

    All I can say is “wow”

    Understandably the majority of readers and contributors to this thread are heavily biased on the Realtors not being qualified to give a BPO… Let’s be honest here folks. the BPO is exactly what it says.. an OPINION. The lenders aren’t calling agents to give appraisals which make transactions either move forward or come to a screeching halt. It’s an opinion that pays very little. Being a Realtor for the last 15 years and having done a few thousand myself, I do understand your frustration. However, there’s one thing that I truly believe sets my own motivation apart from the majority of other Realtors doing BPO’s… that being when I do a BPO… I DO NOT do it to obtain the listing… but to give an honest OPINION of value. That’s all.

    Prior to 2 years ago, I don’t think I can recall a single transaction where there was an appraisal issue. Why do you suppose that happened?? I can tell you why… MONEY. I saw almost every single appraiser friend of mine flourish and have more work than they could handle. The ones I knew that weren’t appraising homes for exactly or more than asking price EVERY TIME, didn’t do so well at first.. but then they got the idea and made sure all appraised soon thereafter. Amazing how the lure of money can/will skew what all those hours and mentoring taught you.

    Then we have the HVCC which put a stop to the lenders calling their well trusted appraisers that they could count on making sure their deals happened. AVM’s got in the way thus reducing the income of your group. I totally understand your frustration again. You had a pot of gold at your doorstep on a daily basis and as long as you kept the escrows moving, everything was just peachy. Then you all got corralled into line.

    For the last 2 years I’ve been dealing with appraisal issues on not only my own listings but also on buyer representations. More often than not, they’re obviously coming in lower than contracted price of the property. This can be either good or bad depending on who I’m representing. However, in each and every instance, when there was an issue I had to defend, the appraisers were all not willing to hold their own and give a GOOD appraisal.. just to cover their backsides and not have someone from above question their value. Some were asked to cmoe back and give a review.. some were assigned to a completely different appraiser. A good amount of these appraisers have had formal complaints and investigations filed against them by my principles … rightfully so when there are clearly PLENTY of comparables supporting value and the trend in the market for that specific location. The most common mindset from appraisers that I’ve have the joy of meeting with over the last 2 years that all they’ll look at is distressed sales comps… whether or not the subject is distressed or not. Is that the right way?? I think not. Not everyone that is selling their properties are doing short sales… or have been foreclosed.

    To all the appraisers reading this… I’ve voted and spoken out plenty of times to have HVCC removed so that you can all go back to giving honest value. I don’t think it’s right that your fees were basically chopped in half so the banks could get a cut which does absolutely NOTHING for your motivation. However, if your group is going to turn this market back into a tailspin again just so the loans close EVERYTIME … I’m not so sure I want that.

    All we ask is that when an appraisal is called for.. regardless of the reason.. that you DO YOUR JOB and nothing else. Stop whining and do something about it. Get HVCC removed and go back to doing your thing… just do it HONESTLY and quit bitching about Agents doing BPO’s…

    Then again.. if YOU would rather do the BPOs for $50-$75 per property, maybe that’s the answer. I’ll bet my entire net worth on that never happening!

  31. I agree with Hamp (4 up)…check out all the appraiser’s turning in their licenses. Appraisers can’t do enough reduced fee via the AMC realted assigments with the added forms to do ALLL of them ethically, stay within their mandated 24-48 hour turn-time, and be ABLE to pay office related bills. The appraisal that use to take 6-8 hours is now more like 8-12 hours…for what $8.00 an hour? E&O alone will eat my lunch this year. How about all the other required fees? Banks OWN the AMC…the AMC mandates the “price fixing” on what they are willing to pay an appraiser. BPOs why?…for $20-$30 bucks. “Get what you pay for”..right? Street Links just called…wanted me to drive one-1-one way to a property in another county (45 minutes) to complete a full service for $240…can’t…just can’t bend that far over for @$10 per hour PLUS I indicated I knew of 3-4 appraisal firms closer and MORE knowledgable of the market!!! Oh…they weren’t on the list! Where is their care about ethics, a mindful report that is worth anything FOR the BORROWER??? Oh yea…and within 24 hours or I may be removed from the list. Are WE not suppose to be protecting the borrower??? Are we not a police officer for …market? WHO cares whether appraiser’s will be around? The HVCC went into affect but BIG GOV forgot to also put in place that Commitee to oversee HOW appraisers were to be treated. A JOKE! Banks and Lender’s by way of AMCs can do anything they want to…thanks to BIG GOV…I just know this is affecting… still affecting the housing industry. One more: A local Bank is foreclosing on properties…taking homes thousands below …they hire a contractor to complete cosmetic repairs and then place the house back on the market…and making thousands…does that not sound a bit NOT ethical?? This is just a way BANKS are now in the Real Esatate business!!! What about the USED-to-Be Home Owner whos credit is ruined…forever? This is just CRAZY!

  32. J. Brown

    I am an appraiser and broker in Michigan. BPOs should be for helping a client with a buy/sell transaction and ANYTHING else that has an opinion of value needs to be an appraisal in compliance with USPAP by a properly licensed appraiser. It makes me sick to see my realtor fees go to an organization that would make the statement in this article. I became a Realtor for professionalism. If a broker wants to be labeled as a valuation expert, get an appraisal license and follow professional standards.

  33. Doug Quenzer Cert. Res. App.

    Victor, The reason why appraisers give opinions of value is because they are objective. I am a real estate broker, and I have been out on CMA’s. I can tell you there is a subtle pressure to get the listing by inflating the value. I have seen it in our market where Agents “buy the listing.” But the beef with agents doing valuations outside of getting the listing is incompetence and no basic appraisal experience on the base line. When I got my real estate education there was one hour on CMA’s. Heck I had no idea how to value a property. That’s the problem. Appraisers are required to have more eduction and more in the field experience. Are there incompetent appraisers? Absolutely. But there are more incompetent agents. Believe me I see their BS work every single day.

  34. Ken B

    When are the NAR-designated appraisers going to realize that giving their money to NAR is the same as giving a thief a gun to rob you. Stop giving your money to an organization that does not represent your interests.

  35. Chuck

    Real estate agents/brokers simply are not licensed to offer valuation services to anyone other than a client in relation to a listing/purchase transaction. The reasoning/argument of “It doesn’t say I can’t so I will until someone stops me” is pathetic. Agents/brokers who are running around offering “opinions” on everything from $5,000 tear downs to $5,000,000 office buildings should have their licenses revoked. But rules and regs are hardly ever enforced.

  36. Hal Mann

    It boils down to the simple fact that appraisers are disinterested third parties and brokers are not. It’s not a matter of willingness to take advantage, it’s a matter of opportunity to take advantage.

  37. Agents are wonderful at what they do: sell property. Appraisers are good at what we do: value property.

    Allowing someone that is in a position to make a commission and to value the collateral for the loan is asking for unethical things to happen. There is no checks and balances in that scenario. I am sure there would be some ethical people doing the right thing, but when there is a way to make a quick buck, the predators will show up and cause the same problems we are still dealing with.

    Appraisers spend hours and hours on one report, where an agent just fills out a form. there is no real analysis done in a BPO. Analysis requires trending, and other tools that good appraisers use. These tools and techniques vary from property to property and from niche market to niche market.

    I have agent friends that have told me that when they perform a CMS/BPO they don’t spend hours and hours doing them.

    I would remind my VA agent colleagues that in Virginia your board has said you CAN NOT do a BPO in lieu of an appraisal:

    A. The provisions of this chapter shall not apply to:
    1. A real estate broker or salesperson licensed in the Commonwealth who, in the ordinary course of business, provides a valuation or analysis of real estate for a fee; however, such person shall not hold himself out as a real estate appraiser, and the valuation shall not be referred to as an appraisal and shall not be used in lieu of an appraisal performed by a licensed appraiser.

    This means that BPOs performed for HAFA are illegal in Virginia, because a BPO in this situation is being done in lieu of an appraisal.

    I would suggest that you don’t get caught doing something your board does not allow. It will mean you license and ability to earn a living.

  38. Wow,
    Appraisers really hate bpo’s.

    Maybe this phrase rings a bell with the appraisers: “How much does it need to come in for?”.
    I spent several years in finance and I began to wonder if that was taught in school. I would need to request a different appraiser. The answer was it needed to come in for what it’s worth, not what we wanted to make the loan amount.

    As for agents & bpo’s, alot of them do need to improve their skills. I would suggst they actually follow someone that’s done them for a while and is acurate with the market values.
    With the thousands that I’ve done, I never had a lender ask me to make sure it hit a dollar figure. That was suggested at the top of this blog.

    Perhaps all parties involved should understand they have a fiduciary responsibility to the party needing the service. That would mean you actually use honest figures to the best of your ability.

    Chris really hit the nail on the head about the appraisers and the mysterious values comming from our appraiser friends during the hot market.

    I would recomend that the lenders put a data base together of their reo portfolios and find out what percentage of them came from the same appraisers & originators.

  39. What a messs. If the appraisers in the last few years had worked for the buyer and not the lender then this would be a mute point. The bank lends on the value of the property but now even to refinance the banks say the buyer is underwater and the borrower is reposable for the payments. Yet the borrower is the one paying fro the appraisal.
    There is no real difference in the BPO and the Appraisal if both parties had the same information. If the two are on different MLS systems they will get different information. Even if the so called MLS was suposed to share information. Also an appraisal is not supposed to use short sales and foreclosures in the value per your policy. But the banks said different so you have and now make it standard practice.
    Now the problem today is we have a perfect storm all the sales are thrown in the mix. Short sales, REO, and resales. In the past the banks could loan so we could seperate out a normal sale and distrssed sale. Is it not the diffinition of value what a seller will sell and buyer will pay all things being equal? If the banks had not take tax payer money to stay a float they would be pushing these out the doors to get them off the books. FHA would have brought back 201K programs back to investors. There would be loans but today few loans and most are cash deals. So value is thrown out the door for everyone and the true value is what someone will offer. Both BPO and Appraislas are worthless.
    The true breakdown was the MLS not having the ability to distiguish between short and realses and Realtors not having the brains to check and see before using them as comps for listings. In that effect they drove the market down even further. Banks started using Zillow and other algrithums to find value and that was a disaster. Now the norm is to use a REO or Short Sale to find the next offer on a house. With the market being bleak if the house on the corner sold at 100 sqft then the next will be 98 sgft even on someone not in toruble but relocating. Another issue is the banks. I have called for a client to refinance thier loan and got one vale from bank and then brought an offer in on the same house at that price only to have it rejected as to low. So how can anyone find the true value of the property. I have even paid a appraiser to appraise my house and got a value less than what the insurance says it can rebuild it for.
    What amazes me is that all of you fall for the trick that if the Banks can get Realtors and Appraisers to sink each other then no one will be left but the banks. Was not that long ago they wanted to take over and be Realtors and they already took the Appraisers and put them under thier thumb.
    I can tell you this if you think i have empathy or a duty to the banks that took TARP your wrong as far as i am concerned and show it by the properties i buy i impose a tax on them to get back my tax dollars. i take no listings from them as well. So in short for the banks it is still what a buyer will pay or they can hold them and finaly they will wake up.

  40. It’s all a mess that is for sure!

    BPOs and appraisals are all a problem right now. BPOs are called to give their opinions in areas (locals) where they have no expertise, and appraisers are doing appraisals in areas where they have no knowledge of the local market. As a listing agent, especially in the Short Sale arena, we have to make sure that the BPO has correct information, etc, and as a listing, or buyer’s agent, we have to pray and hope that the appraiser that gets sent out, knows the area, especially rural areas where there are few comparables.

    There does not seem to be any absolutes in this market, something we all just need to learn to deal with. It is an unstable time. If each of us pursues doing a better job, because it is the right thing to do, maybe our outlooks and attitudes will change.

  41. I have in my possession a BPO where the “REO Queen” of Pittsburgh used 3 closed sales in the $50k-$70k range and 3 active listings in the $45-80k range and somehow stated an opinion of $222k.

    If I did that I would have my license stripped by the PA Appraisal Board, her punishment nothing.

  42. John

    BPO’s are illegal in many states, other than for listing purposes.

  43. I am a Realtor and do BPO’s for several large mortgage companies. I agree with a BPO for quick sale prices and average selling times, etc. I think we do a better job than the appraisers on this part because we know the market. I have, in the past, had a problem with trying to do a BPO for a home that is in obvious need of major repairs or work that has been done without permits. I usually do BPO based on as is value and if I think more needs to be done, I note that I feel an inspection needs to be done. I do not try to guess major repairs needs or prices. Especially for $60.00. I think both BPO and appraisals are needed for different reasons. We should keep both

  44. Tony Jones

    In order to get things back where they should have always been , why not pass a Federal Law saying no selling of loans on he secondary market! Mr. Big Bank wants to originate bad loans and then immediately sell them to unsuspecting investors….oh nooo! Mr. Big Bank originated the bad loan, pressured the Appraiser, wants to use an AVM or a Broker Price opinion…no problem; but you caused the probelm now it’s all yours! No selling of loans, if you made a bad loan you eat it! Mr. Loan Officer, you get paid a fair and reasonable salary…no more commissions and you WILL be held responsible for those that go into default! I am both a Certified Appraiser and a Broker and I’ll bet my life Mr Big Bank will quit using AVM’s and BPO’s altogether! Instead of Appraisers being pushed out of business and pressured to complete reports overnight ‘ol Mr Big Bank will start wanting appraisers to take their time, make sure every i is dotted and every t is crossed. Instead of the Loan Officers making fortunes they could afford to compensate the real workhorse in the equation the Apppraisers! But, nah that’d bever work because the biggest crooks of all would have to start being honest! People often refer to Attornays as not being trustworthy, but, for my money Lawyers are Saints when compared to Bankers.

  45. Greenback

    If a Broker Price Opinion was an opinion of value, it would have been named “Broker Value Opinion (BVO)” and they would have been given a license that says they are an Appraiser. Price, Value, and Cost all have different meanings and reasonings.

    I’m going to forage through and I want to comment on every post made by a REALTOR who I believe isn’t an Appraiser. Trust me, all you can do is sell, but you won’t sell me nor my license.

    Sincerely.

  46. Captain M

    “Then again.. if YOU would rather do the BPOs for $50-$75 per property, maybe that’s the answer. I’ll bet my entire net worth on that never happening”

    ****************

    When considering what an appraisers fee has been traditionally vs what Realtors charge as their commissions, it seems as if the entire Realtor population has been more denigrated than the Appraisal Industry…for being offered and accepting $50-$75 fee for BPO for listings the banks have no intention of ever giving them? OR is your inference that Appraisers will not do an evaluation for a similar fee if they (non realtors) were provided with tools that made their EVALUATIONS USPAP compliant?

    Appraisers decline them due to the enormous liability. Realtors have no such constraints or accountability

    I suggest that the Appraisers hands are intentionally tied and kept binded by USPAP so that the REALTORS million man army may be intentionally taken advantage off…and i do not mean this to be a compliment via the use of their superior evaluation skills.

  47. Gary R Sebolt, CREA

    As a Pennsylvania Certified Residential Real Estate Appraiser, I am very pleased to hear that the biggest majority of Real Estate Agents and Brokers sounding off on the BPO topic are spot on. There is a place for BPOs and a place for Appraisals. We are all Realtors, now it would be nice if NAR would do it’s JOB!

  48. The problem with using a BPO are not a matter of competence, but a matter of objectivity. As a broker, I have a financial interest in the transaction. My object is to get the deal closed as quickly as possible. I don’t mind if the bank sells it at too low a price, because I can turn around and make an additional commission from the buyer reselling the property.

    As an appraiser, my only concern is to value the property at an appropriate price. Everything about my business depends on me getting the value right. This is why many state laws require the use of appraisers for valuing property, and prohibit brokers from valuing property except as part of the process of selling their services to clients.

  49. Jim

    Here is the deal. If a BPO done by a Real Estate Agent with no training in appraisal is as good as a typical appraisal, then do we really need appraisal licensing? If it is true that after 2-3 years of supervised training, 200+ hours of courses and exams, a typical appraiser is no better than a Real Estate Agent with no training, I submit that appraisal training and classes are worthless. Just something to think about….

  50. Robert

    I’ve been a Broker for 34 years and have prepared many BPO’s and have known many agents who have done BPO’s. Since I am a party to appraisals on almost all properties that I sell or are sold by my company, I think that REALTORS are, in many cases, more able to determine value than appraisers. Many times I have had to go to war with an appraiser who didn’t know what they were doing. We all use the same comps and to assume that appraisers have more ability to detemine repair cost, overall condition and the direction of values is a misrepresentation. If an agent concentrates on an area, usually that agent is more knowledgeable of values in that area than any appraiser could be. So lets not suppose that there is some complex formula to determine value, there is not, we all use the same comps.
    I really don’t care who does the estimate of value (and that is what it is always) and I don’t have anything against appraisers.

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