Have any of the Brokers here checked with your E&O provider to see if you're covered for actions taken against you if the banks start sewing for poor work on BPOs??

There are some agents and Brokers doing BPOs, giving low values and then quick selling way below "wholesale" market, sometimes to "in the pocket" investors. At some point, I expect the banks to start taking notice. I think if they crack one or two of these guys, then all the honest providers will be in court defending their value opinions.

I told them I did bpo's before getting coverage.

I take your question to indicate that most of the agents/brokers are not covered by their E&O. Do you have any facts to suppport that? Or are you just warning that everybody should check?

My annual cost was computed based on ratio of commission income,and other real estate related income, which I specified as BPO.

But GreatLakesBroker has used the term "values opinions" which makes me cringe when I hear or read an agent doing so in regard to a BPO. I provide pricing opinions. You would be surprised at the BPO's that are prepared with the agent using that term.

[quote=Alabama]I take your question to indicate that most of the agents/brokers are not covered by their E&O. Do you have any facts to suppport that? Or are you just warning that everybody should check?

My annual cost was computed based on ratio of commission income,and other real estate related income, which I specified as BPO.

But GreatLakesBroker has used the term "values opinions" which makes me cringe when I hear or read an agent doing so in regard to a BPO. I provide pricing opinions. You would be surprised at the BPO's that are prepared with the agent using that term. [/quote]

I have no idea if most brokers/agents are covered or not. That's why I'm asking if you've actually inquired with your carriers regarding BPOs. (It sounds like you have).

Also, interesting deliniation you make, value vs price opinion. The BPO forms I've used ALL ask for a Market VALUE(as is and as repaired). So, does that make it a VALUE opinion or a PRICE opinion. Call it what you want, it's you opinion of VALUE.

You will find most E and O policies exclude bpo coverage. If you want that you usually have to add it into the policy.

Just like property management or anything else the E and O carrier knows based on historical data which activities carry the most risk and have the most litigation and they price the policy accordingly if they will cover it at all.

I think the semantics become important as some Authorities will argue that:

Providing a statement of VALUE is an Appraisal Function; while

Rendering an opinion on PRICE is a Real Estate Brokerage Function.

It may all boil down to whose turf we are treading on, and which License you should have to perform each function; but I think THAT is why the "distinction" in wording has become so sensitive. I would say this is still a very "Murky" area.

As always, I welcome correction if my understanding is wrong.

there was an interesting article in realtor magazine (one of hte last 2 magazines that was sent)in regards to bpos. they had a lawyer on there stating that what you call it is what you call it...a rose by any other name... we are performing a service that we have every right to perform. we are doing a cma that has been called something else. simple as that. some might argue the fine details, but hey, i'm not a lawyer.

check it out. if i still had the magazine i would cite the article, but i think i threw it away or maybee it is under my coffee table to keep it level. either way, i dont have access to it anymore.

I have it here somewhere then - and it should be online as well - I'll look for the link but if someone else finds it first

My insurance agent found several companies that refuse to write policies covering BPO/REO work. I made sure, when I opened my own office, that my carrier knew up front that these things arethe biggest part of my business...