Hi Everyone,

With BPOs just barely trickling in lately, I decided to contact my local banker and ask if I could do some BPOs for them. He advised me that they use an automated value service that gives them an instant value when they enter the address. He said it costs them about $25 per property. I told him for a little more, he could get at least a drive-by and for just a little more than that, a full BPO. He said he would present the idea to the board members and get back to me. Well, that same day, his boss asked him to obtain a value on a property and he called me to do the BPO. He pulled the automated value also. I did a thorough BPO and I am certain of my values, but my values were $40k less than his AVM. My questions are:

1. With such a discrepancy in values, are they more likely to just stick to their current method of obtaining values?
2. What could possibly cause such a discrepancy?
3. Are there any implications on my part for why my value seemed so low?

Any advice is appreciated. Thanks!

How is his system determining value? What is your market like? Why did he obtain value on the property? Is the owner going behind on payments, or were they refinancing? I would suggest sending him mls sheets of your comps to show your value. You need to go into more detail before we can give you some answers.

I think you need to know the parameters that the automated service is using before you can determine why the difference is so large. I assume you are only using MLS records and the AVM is using public records, so it is picking up FSBO transactions that you aren't. Also, if you are actually looking at comps within a neighborhood instead of those within a certain distance from the subject, that would make a difference too. When I do a BPO on a hosue in a subdivision I try to stay within that specific subdivision whenever possible. In a suburban area, going a mile away from a subject can put you in a completely different type of neighborhood with very different values.

Does the AVM show the actual comps that were used to get the value? If so, maybe he would let you see them and then you would have a better idea of what is going on.

From my understanding, AVM values are usually derived from using an average dollar per sq. ft, like what Zillow does. AVM's are flawed, IMO, and any lender that uses them, does it at their own risk.

BPOs are better :-)

Hi Bill,

The owner is behind in payments. He doesn't know how their system determines value, it doesn't even give comps. I can back up my values.

When the house goes back to the bank, hopefully it sells near your price. You probably wont get any more work from them until then because your values came up so low, but I think it's best to stick to your values. Good luck.

Hi Bill,

I'm wondering if he pulled the AVM so he could tell me what he wanted me to bring it in at. If that's the case, I'm sorry, I just can't do that. I even spent extra hours on it trying to determine if I had missed something, but I kept coming up with the same thing. If they don't give me anymore work, I'll just tell them, "You want the truth? You can't handle the truth!"

so the bank does a automated value on a asset that is late on payments, but they were not informed the property had a fire the week before......lol. all in the name of saving a couple bucks

My sentiments, exactly! Just spend the money.

I think the new trend is going to be Automated Valuations with Property Inspections to back them up. That will work well for many situations. I have already seen PI business pick up substantially in my area. Appraisers and BPO agents are both going to get squeezed.

That's quite an evolution. They've gone from appraisals to BPOs to property inspections. What's next, OOVs (Owner Opinion of Value?

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That's quite an evolution. They've gone from appraisals to BPOs to property inspections. What's next, OOVs (Owner Opinion of Value? [/quote]

LMAO!

Hi Rising,

How are things going?

$25?????

He can get the same BS value for free on Zillow... and see the comps.

I thought bankers understood value? Hahahaha

Going great RealEstateResult, you?

Fantastic, thanks. What are you selling these days?

Not a whole lot. I've got some listings that I can't give away, and sellers who have not yet come to terms with reality. I'm considering firing some clients that just don't get it. I try to be empathetic, as much as possible, but, I refuse to argue with those who do not have my level of understanding/expertise, in my own area of expertise. That would be as dumb as someone arguing with their doctor without having the medical degrees/experience.

You're preaching to the choir. I'm going to email you so we can rap.

Cool.