An e-mail from PT is out showing how the appraisal industry is in Washington to lobby for the elimination of BPOs throughout the country. Below is the pasted e-mail with links they included showing their intentions.

Brad


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BPOs, the role they play in the valuation industry and their legality are being called into question. We at Pro-Teck know that BPOs are a tremendous resource in conjunction with other valuation methods and want to make sure that they continue to be an option.



The industry needs choice as banks, servicers and investors determine what mix of valuation methods are best for their needs. Unfortunately during these rapidly changing times lawmakers are hearing that BPOs should not be part of the solution.



What can you do to change this perception? We ask that you get involved on the local, state and/or federal level. Take the time to write your local board of realtors, state boards and the NAR reinforcing BPOs place in the valuation process.



Time is of the essence as things are moving fast in state and federal legislatures. You are a real estate expert, your knowledge is valuable and we would hate to see that knowledge silenced.



Click on the links below for a sample of how others are characterizing your efforts. Please help provide a fair counterpoint by writing your local, state and federal officials today.



Thank You,



Pro-Teck Services


advocacy@protk.com



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Jim Amorin, President of the Appraisal Institute testifying before the House Financial Services Committee on April 23, 2009.

http://www.house.gov/apps/list/hearing/financialsvcs_dem/ai-asa-asfmra-naifa_-_amorin.pdf



An open memo from Appraisal Groups to all State Appraiser Board Chairs & Lead Staff Contacts about BPOs and questioning their legality. http://www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2009/BPO_Letter to_State_Boards.pdf

This is all bs and they should quit crying about it and start shifting. That's what I had to do.

With Pro tek on our side, how can we go wrong

Are you sure that's from an appraiser? cuz all the appraisers I know write in ALL CAPS....

OK, I have 2 thoughts here:

Thought #1: I'm in favor of banning bpos. I don't really like doing them, but they're the way I broke into the REO business. If they get banned, it will saw the legs off the ladder that I climbed up to get into this business. It will eliminate competition and be better for me.

Thought #2: Dadgummit, I really like thought #1

My reo lstings that get appraisals done to determine list price are always overpriced. The appraisers who support this are morons. Bpos serve a purpose and theres alot of good agents who do them. There are some bad agents who shouldnt be doing them, but the same can be said for appraisers.

LOL Rocky. I like your thought process. Statistically though, only 1 in 8 realtors who try to break in to REO will ever make it past the bpo process. It's just too much work.

I think the Appraisers are going to win. I think the NAR has been to slow to react nationally and won't spend the money to defend then. Statewide (at least in my state)banning of BPOs is not a priority. Locally the legislative team has no idea what a BPO means, even agents that do them has no idea what it means (except a quick 35 dollars).

$35 ??????

Must be RRR

Realtors have been doing bpo's under the name of CMA forever. We never had to call an appraiser on a listing appointment or prior to making an offer for a buyer, that was part of our job description/duties and those of us that have been in the business for any length of time ( 24 yrs here )have done thousands of them . Amazingly these appraisers more often than not in my area would appraise them to the dime of the sale price on the contract and now they are needed for bpo's? I don't mean to go off topic but Realtors are doing more and more for less and less and know if they dont', there is someone right behind them that will. Free bpo's are an example as well as what is happening with commissions and the attitude that goes along with it. Sorry for the rant but eventually this market will change- everything does- and some of these banks and other companies will realize they were short sighted < sigh> ..but until then.

If the appraisers do manage to ban bpo's (a long shot, IMO), and then actually manage to get it enforced (an even longer shot, IMO), it will just mean that we will be doing BPO's for free. And there is nothing they can do about that.

..it just keeps getting better..lol

I think they BELIEVE we do bpo's for loan origination. If they are going for that, more power to them. We shouldn't be doing bpo's where loan value for a purchase is concerned. To blanket ban them though, I think that's a long shot and just them whining because they have lost work. They won't do loss mitigation bpo, short sale bpo's or drive-by's for the non-performing loans. I'll still be in business, I'm sure.

How many people who are completing BPO's have a copy of a contract in there hand showing the target price. Versus, appraisors who generally have that information.

Hmmm - thinking - thinking - 2 alternatives may be:

1. We become part time employees of the asset management companies.

2. We provide them with all the information, do the inspection, tell them where we would suggest pricing to list the subject - and let them put it together.

or 3) get your appraisal license.

Let's face it. The appraisers are not mad about agents doing BPOs. They're mad right now for two reasons (both money related):

1) BPOs are stealing from their bottom line and they don't want to adjust.
2) HVCC is going to force them to go through many AMCs for appraisals, and it's lowering their fees. They don't know how to attack the AMCs yet, but realtors are an easy target.

The way I see it is that you need to play both sides of the fence.

Since this is usually Interstate Commerce, and because on July 24th, the Federal Minimum Wage will be going to $7.25, that would make it way, way, way too expensive for these Companies.

No, we'll just have to stop giving local "opinions" as to where the values are as of Today.

I hate opening the can of worms - but when I was appraising I was told by a very important official on the appraisal board that an appraiser completing a either a CMA or BPO needs to follow the appraisal guidelines. I know this has been beat to death, but that is just what I was told by the man in this state that headed the board at that time.

I didn't want to argue with him, as many appraisers are both agents and appraisers, I just did not want to be noticed or make any comment that I would be remembered by

Leave it to them to overprice property.

Well.......I say we organize to ban Appraisers from doing Appraisals! Take that!

Pine, that's sounds doable! Get paid as W-2.

Congress will be easy for the appraisers to convince them to ban BPOs.

They have no idea what the appraiser testimony means, the appraiser-testifiers can tell them anything they choose, including that BPOs are used by lenders to finance new loans. No one will question the appraisers' assertions, because no one knows the questions to ask them. And no one from NAR is giving them the questions to ask the appraisers, either. They WOULD listen to NAR if NAR was talking to them. Which, apparently it is not.

They will believe anything the appraisers tell them. NOT because they LIKE appraisers, just because they're completely uninformed but will pretend otherwise (per usual).

However, NAR WILL start talking when they've passively encouraged things get to the point where BPOs will be banned. At that time, they will put forward a new NAR-approved and probably extremely costly training package and BPO designation for their members.

And Realtors will scream and yell that they've been doing CMAs forever, and there's no difference. NAR will say they have no choice in view of new laws agains BPOs being performed but to institute new policies and procedures to PROTECT its members from loosing the ability to perform BPOs legally. That they had no choice but to insist that 1)Brokers/agents performing BPOs will all be members of NAR; and 2)Brokers/agents who perform BPOs will pay for special training and certification to do them through NAR.

They will say that's what Congress asked them to do.

I think appraisers banding together to ban BPOs is bs, but it's dangerous bs to those who depend on BPOs as part of our total income. I think we agents should write our representatives and tell them OUR side of the story. If we remain silent, the appraisers may get their way. If NAR isn't standing up for us, we need to stand up for ourselves. I'm seriously considering joining NABPOP because they DO lobby for the right for realtors to complete BPOs.

Bingo!

IMO, the appraisal industry is short-sighted to go after bpo's. AVM's and 'drive-by" inspections are here to stay, in one form or another. We're already seeing one company require all the typical bpo information without a stated value opinion.

With historical/hysterical value increases in the 2003-2007 markets, many of us made changes or changed our business models in anticipation of what was coming. Other than increased education and training imposed on the appraisal profession by the Federal Government (which ultimately did not prevent some cases of fraudulent and incompetent reports), the appraisal industry did nothing to make changes. Business as usual.

But it's not.

That being said, I believe the appraisal industry will be successful in getting the Feds to ban agent's performing bpo's for compensation. They've been lobbying for a while and momentum has been building. Other than NAPBOB, do you know of any other company or entity lobbying for bpo's?

NAR doesn't care about the REO/BPO agent niche. Unless a lot of agents have been bombarding NAR, their state and local associations, senators and congressmen/women with snail mail, emails (and checks) regarding this issue (doubtful), expect changes.

NAR is supposed to issue a statement/opinion about agents performing bpo's this month. Good luck.

i don't think the appraisers will succeed in any BPO ban for 1 reason:

Banks want BPO's; they serve the purpose for a fraction of the cost and give better information. Appraisers typically look at sold comps only.. What the heck? You have to look at active listings to get the complete picture in today's market;
active prices are falling far below recorded sales in my area.
Hey, they don't sell property for a living..they have no clue what attributes really increase value in the eyes of the buyers.. ie strong school districts, neighborhood reputation and all the other intangibles..

When a AMC has a new asset they order two BPOs, one from the listing agent and another from an independant agent. They also order an appraisal. This enables them to figure out a marketing plan.

BPOs are hear to stay. They will always have to pay us for them or we simply wont be very interested in doing them.

Imagine if we required all members of our MLS boards be Real Estate Agents. Appraisers get the comparable sales from MLS and if we required them to be licensed agents it could put a dent in their action.

Maybe I'm not looking at this issue correctly but:

The lender that orders the BPO has made a business decision to use BPO's for whatever purpose. They are independent of NAR, the Appraisal Institute or any other real estate related trade group. If they fail due to this business decision, they fail. Businesses close every day.

What right does a trade group have to dictate to corporations how they will run their business?

And of course, the appraisal lobby cites "protecting the public" as their reason. They wouldn't have another agenda would they?

I think the Appraisers just see a few million $400 Appraisals going up in smoke . . . . but they never existed to begin with. The Lenders have just been using BPOs as another set of eyes on the ground to monitor (somewhat frequently) what "appears" to be happening to the value of their collateral.

It's only the State Real Estate Commissions who might write Regulations, or ask their Legislatures that Laws be written, to ban Brokers from expressing an Opinion, even when it is not for the purpose of supporting new lending.

Right now, I think the Appraisers are lobbying NAR just to prevent them (NAR) from supporting the Brokers on this issue; and in this effort, they may well succeed. It's always easiest to take the "do nothing" approach.

None. However, they have such a powerful lobby that they got every state to enact their rules as minimum standards for appraisals.


MONEY!!! It's all about money. They can claim that they have more righteous motivations, but it's all about the money. They're pissed at agents/brokers for doing bpos. They're pissed at lawmakers for enacting HVCC. They're pissed at AMCs farming appraisal orders that they used to get directly and who are now taking a referral fee. Just find an appraisal forum and read the venom they are spewing at everybody. It's pretty funny, actually.

I always think of this fact too, regarding the appraiser having the contract in front of him or her and sterring the appraisal to meet the contracted amount. Even in situations when was selling an REO way below market and no real repairs, the appraisal came in within $1000 of contract. The appraisal should have been at least $10,000-$12,000 higher than the appraisal. They just steer it to meet the contract in an effort to get future orders. IMO, BPO's are way more accurate as we give the unbiased value, the current market value, we are not persuaded by the contract( most of the time we don't know the Contract amount. It seems strange. I know it happens everywhere, everyday.

I am a trainee appraiser. Did work to help my supervison on 3 appraisals. My supervisor happens to be my Broker. I am her agent doing BPOs. When things were slow in the appraisal business who do you think wanted to do BPO work. The fellow appraiser that has a RE license. My Broker said OK. So he started doing the CC bpos and then other mill bpos. He was happy. Money was coming in.

I was at an appraisal CE class ... one lady there, belonging to the appraisal institute, was against bpos ... "they are making values drop every day" she said. And was very adamate about banning bpos. That Freddie and Fannie are ordering them for all their investments. And sice the condo market in her area was going down the drain, she was really disturbed by it. She said that a bpo was enough for Freddie and there is no 2nd opinion and no appraisal.

My broker, who is an appraiser, as I mentioned, told her that she is missinformed. That Freddie and Fannie order them on all their assets or their investments, and then there's a 2nd and an appraisal to back it up.

The appraisers are not on the front lines. They don't deal with the difficulty of marketing, rehabing, staging, selling, feedback, etc. They have no idea of how this real estate market really works unless they are a full time agent.

I don't feel sorry for them having to deal with the AMCs ... and I'm one of them and work with them.

I agree with banning the appraisers that don't have an RE license and don't actively work as an agent.

I agree.

Appraisers work the entire metro area - I've come to know my bpo territory very, very well so I feel my knowledge of that particular market area is better than theirs.

That, plus we go out with buyers and get their unbiased reactions of the properties and we see it from a buyer's point of view, not the sellers. And everyone knows it's the buyer's who determine the value of a home, not the sellers.

Appraisers are too busy fighting amongst themselves to change anything. I see it day in and day out. They can talk a good game but when it come to actually doing something guess what.......nothing happens. I see it and read about it every day as an appraiser. I am so glad that instead of upgrading my license I went for the sales agent license instead.

More one sided garbage on BPO's from the Tampa "press."
http://www2.tbo.com/content/2009/may/29/.../news-breaking/

I read that article too former blue angel. Makes me sick. First appraisers were saying that we were pricing our BPO's too high on a short sale listing for a shot to get the property as a future REO listing. Now they are saying we are pricing properties too low! Make up your mind appraisers. Which lie do you want to stick with?

timtally- amen- they can't have it both ways. California holds a licensee responsible for overpriced bpo's in the hopes of financial gain/ reo listing,etc. and an agent could lose their license ( effective Jan 2009 ). ..time will tell if this leads to lower valuations on bpo's..perhaps that's the plan. tic,tac,toe go get an appraisal.

So I guess it's a BP and not a BPO anymore? That sounds like they want to make BPOs a statement of fact rather than an opinion.

I like the fact that they can denigrate the sales agent but then who do they call asking for comps? Do your own work.....

How can California hold licensees responsible for overpriced BPO's when a license is not required by DRE to complete BPO's?

DRE Can Discipline Licensee for Inflating BPOs: Beginning on January 1, 2009, the DRE can suspend or revoke a real estate license if the licensee generates an inaccurate opinion of value (Broker Price Opinion or BPO) for a short sale of residential real property to manipulate the lender to reject the short sale or to acquire a financial or business advantage, such as obtaining a listing agreement. This new rule aims to preclude a self-serving agent from inflating a BPO in hopes that the lender will reject the short sale, foreclose on the property, and give the BPO agent an REO listing. Senate Bill 1737.

Thanks for clarifying. I will review SB 1737.

And how in the world is California going to prove that a broker did that deliberately? Unless the broker is stupid enough to write that they are valuing the property incorrectly in the misguided hopes of getting the listing, it's all conjecture. In that case, maybe they do deserve to lose their license. What a waste of time.

it's insane. I suppose if someone loses a short sale and then one of the bpo agents lists the property as an reo- short sale seller/buyer cries foul- that could initiate the above I suppose.

Has anyone here actually gotten an REO listing solely because they turned in the high BPO?

With EXTREMELY rare exceptions, the only BPOs I have ever done that resulted in REO listings were REOs that were ALREADY assigned to me in prelist. Not short sales.

I've done literally thousands of BPOs with no thought of getting a listing. I do them because they fit well into my business model, provide an extra income source, and most of all because they provide me with absolutely invaluable market insight.

So does this happen to some people? That they actually turn in high valuations on BPOs and banks fall all over themselves turning down short sales in order to list them with the BPO agent as a foreclosure? Excuse me if I am a little skeptical about that.

Ellen- I haven't a clue. The fact that California went to this extreme makes me think it must happen far more than we think. It's amazing to me and not something I'd know about first hand.

Not in my experience. I did a BPO about a year ago as a second opinion in a pre-list. I guess I liked it better than the person who listed it, as I thought it was worth about 100K, and thought I had supported my estimate well. Imagine my surprise when it came on the market at $49,900. Buyers were all over it and it sold in just a few days...but did it go to the agent who said it was worth more money? Nope.

First of all, most of you do not understand what an appraiser has to go through to complete an appraisal. You are quick to criticize but you need to get your facts straight first. A BPO is just your opinion with no real facts to back up your value.

As a reviewer of BPO's and appraisals for numerous large lenders I can tell you for a fact that most appraisers are far more qualified for valuations than are most real estate agents. I see many agents that just pull the 3 lowest comps for both sales and listings and estimate the value near the lowest comp without considering anything else. I assume so they can sell it quickly. They do not look at supply and demand, rates of decline over the past year or month for a particular neighborhood, analyze listings, pendings, expired listings, call agents for seller concessions, condition, upgrades, etc.

Did you know an appraiser has guidelines he or she must follow, called USPAP? Not to mention the more stringent guidelines required by the lender. An appraiser cannot make any adjustments without proving it. You need to have a matched pairs analysis or significant commentary explaining each and every adjustment and why that amount is justified. You also cannot adjust more than 15% net or 25% gross adjustments, go over 3 months or 1 mile. You cannot have any adjustment over a certain percentage of the sales price depending on how much that lender will allow. You need to reconcile your final estimated market value with the other approaches to value. I have only just begun, most of my appraisal assignments have 10-12 pages of instructions from the lender that MUST be met not to mention USPAP.

An appraiser cannot give a value based on a gut feeling like you can do with a BPO. I do BPO's, appraisals, reviews and their many good agents / brokers completing them but their are far more that are incompetent. As for appraisers there are very few that are incompetent but unfortunately there are many criminals. In my opinion there is no comparison between your average BPO and your average appraisal. I will also say that if I were an investor I would want 2 appraisals and 3 BPO's. I could reconcile the value from there. But then again, as an investor I only use my own opinion. So far so good!!!!!!!!!!!

Gman, nice speach but you forget to address the past few years of appraisers who over inflated prices, adjusting comps to fit the buyer/mortgage price, who now have become more regualated as a result of the appraiser sloppy work of the past, their own greed to continue working for lenders who what "Fixed" prices. So the crap about following the USPAP guidelines and not being able to make false adjustments is bull.
The more data in the a report is more data that can screwed with. We all know the saying "Figures can lie and liars can fiqure". Certainly the appraisers of the world proved they know how to lie about the figures. Just look back three years or so. Alot of blame has been place on the Appraiser for where we are today.

Finally, I have to agree, in both the BPO and Appraiser world, there are people who should not be doing them. As with any profession, you find poor quality, lack of education in the process. I see too many agents looking for the lowest comps and fail to study the market or current conditions to provide a fair market value.

OK, whatever! We get the same information that apperaisers get which is comps from MLS and/or tax records. If the comparable sales and listings aren't facts, then what else could you want? I think you are a trolling appraiser IMHO.

Secondly if appraisers dislike Realtors so much due to completing BPOs, maybe we should cut them off of access to MLS for getting comps? The exception of course being an appraiser that is also a Realtor.

I search for comps that can bracket the value of the subject ...that typically means inferior,equal,superior...and make adjustments in between those values...the only thing that influences me... is the subject itself...and yes... I chat with QC often... sometimes I even call them...Gman I do not mean to offend...but Ive never met a investor who does not try and manipulate the value...

Ditty,

(With kindness in voice and sincere hope for a civil dialogue)

For clarification, you "search for comps that can bracket the value of the subject..."? Where do you obtain this value? Is it not the comps that give you the price range? From your statement it seems you have a pre-determided price or price range and find comps to support it.

Or do you search comps, find a price range, and then search again to find 1 equal, 1 inferior and 1 superior for every order you do?

I often have 2 inferior, 2 superior or 2 equal of the 3 comp listings or solds.

Ideally, companies would like what your scenario describes but are the comps determining the price in your orders or supporting a pre-determined value?

cj

A BPO is an opinion of value supported by comparables. There will always be a level of subjectivity to the report, that's why it is an opinion and if we were honest with eachother, value would not be defined as a static figure. The appraisal is still one appraiser's opinion (which some of us here have found on more than one occasion to be inaccurate). They just lack the fancy acronym with the O.

If you're asked to do a BPO on a house in the ghetto which turns out to be in fantastic shape and the only sold comps you have within the past six months to a year are of burnouts, you've got a problem. If the value you give is for that day only, if you're giving a value supportive of the only comps available (the burnouts) then the assumption would be that that house is a burnout (though visually you can see this is not so). If you valued the house as a burnout it must be assumed that the house will be a burnout (a future value then, not for the present day) and if you decided to value it opposite of that then you've got no comparable support and only condition adjustments (which are also opinions and subjective).

What we have to work with often isn't the ideal, unless you may be in a cookie cutter neighborhood. In a situation such as the above, I ask the client what it is they are looking for. If the want the trend of what is likely to happen to property or if they want immediate value and I've had clients send back comparables of non-MLS flips to challenge values.

No matter which rout you're pursuing, the fact of the matter is that you cannot define value in objective terms, it's not static. There is a level of subjectivity to every BPO and every appraisal. I've seen appraisals and BPOs with good support and when it was market time, they were dead wrong.

Sometimes it works to first find a sold comp that is clearly superior and work backwards from that, knowing the subject would not get that price..

If I were listing MY OWN HOME, I would much rather have a well done BPO than an appraisal to know where to price it. Appraisals are very good at giving a picture of what happened in the past in that neighborhood but their predictive value of market value is inferior to what a good agent working off good comps can do.

JMO.

yes...noted it needs clarification...search for comps relating to subject in age,style,GLA and location to determine value...should not have even mentioned value in that sentence...trust me I have no preconcieved notion...on anything...LOL...I never go to a interior with any research done either...except directions to subject...

We're on the same page then Ditty.

cj

We knew you meant characteristics ditty - and the term 'value' is being used to much - I think it depends on how your state defines pricing and value - so what may be 'value' in OH may mean 'pricing' in NC.

Ha,Ha...I am a blank sheet....flappin in the wind...

I've always viewed appraisals and BPO's as similar but different.

Like a car, you could have a $60,000 Beamer or a $200 Beater, they both try to provide the same basic thing, transportation.

An appraiser is given a contract and asked: Is this property worth the contract price? So the appraiser works backward from a price and tries to determine if the property is worth the price.

A BPO provider is asked: What is the value of this property today and 30 or 60 or 90 days in the future. So they work from a set of property characteristics forward toward a price.

Agree with Brad that GMAN is an appraiser posing as an investor..
we totally understand what goes into an appraisal..on a consistant basis we are being sent them by asset managers and lenders to explain why they are soo wrong......
I just had the listing side on a REO where the VA approved appraiser undervalued the property to 10% below the purchase price (must be new and didn't get the memo regarding the appraiser rule that everything appraises +/- 500.00 of the contract price)
Now let's take a vote, how many REO's are selling at 10% over value on today's market? Zero
I was asked to review it by the buyer and forward my comments to the buyer who then went to the lender and the VA administrator.
Most of his adjustments were inaccurate regarding property condition and he used the trend of property declining 2%/mnth for the last 6 months (all comps were 6 months old) and reviewed only solds. This was a water front property and the area was not declining at the rate of similar areas.
End of the story was it had to go to some upper level head of USAA/VA loans appraiser who agreed with me and appraised it at contract price.
yea..we know what goes into an appraisal...

Many of you bring up valid points, I agree with many of them and disagree with a few. I have admitted there are criminal / incompetent appraisers and criminal / incompetent agents. But please do not blame just the appraisers for over valuing your sales. The arm twisting for value from agents and loan officers was intense. i.e. "You don't produce the value and you don't get anymore work from us" I for one never buckled to this pressure, not once, but I will admit I lost some work because of it. I have also admitted that if I were investing in a property I would want both appraisals and BPO's so that I could reconcile the value before purchasing. I guess my bottom line is I want ethical appraisers and or agents completing valuations for me. The problem is how do we screen them out?

Perhaps you should change what BPO stands for from “ Broker Price Opinion “ to “ Broker Preliminary Opinion “, which then could be followed by a more advanced report that is better researched and analyzed which we might want to call BAO as in Broker Advanced Opinion (at $250 dollars per report ).

After all you can’t expect much from a $30 dollar BPO which is done in less than 10 minutes (some agents brag that they can do them in under 2 minutes).


I myself would be interested to know both the BPO (followed by BAO) and the appraised value as I think they all complement one another and can give me a better picture of the property values in relation to the property characteristics and the current and future market conditions.

(not meant as professional or legal advice)

-

Pretty good post about the reality of an appraisal and a BPO GMan! I do wnat to add that the bolded sections above are not USPAP requirements but only suggested Fannie/Freddie guidelines which can be exceeded when warranted.

Most agents have a very narrow observation point for appraisals, that being for the "sale" appraisal. In reality that is a small market segment for most appraisers. For me, sale appraisals are less than 20% of my appraisal business and even that percentage is declining as the big box lenders have been shifting for years toward cheaper/faster appraisers. Any appraisal for a big box lender, which is the only appraisal work most agents see, is going to be predisposed to have been performed by the cheapest/fastest, not the most qualified. And with the implementation of the HVCC it's going to get worse.

That sounds like a typical appraisal, not a Brokers Price Opinion

Where do you think brokers get the price/value/recommendation from? Do you think that we just pull it out of thin air? Of course not. It's based upon comparables and what we are seeing the market do. If you don't understand that, you should not be arguing for or against a BPO since you obviously have no idea what it is or how it is formed. That's got to be one of the top 5 most ignorant statements I've ever read on this forum.

So now Price is interchangable with Value. Thanks for providing the number one most ingorant statement

The emphasis was not on a singular term such as price vs. value, which is an appraiser's made up argument. The emphasis was on the fact that you don't know how a Broker's Price Opinion is formed. Thank you for playing, but you failed.

My bad, I only used bolding. In the future I'll use italics and an underline to aid the visually impaired. There is a very distinct difference between Price and Value but apparently that is little concern to those who do BPOs (or are then BVOs?).

Again, not the point. The point is you are railing against BPOs and you don't even know how one is formed. Why don't you address that little screw-up? It's complete ignorance, but continue on. It's quite entertaining.

The argument of what constitutes price and what constitutes value is an appraisal argument that has very minimal, if any, relevance to an agent. You're attempting to nitpick on something that is so inconsequential, it's pretty funny. Keep on trying to deflect the discussion if it makes you feel better.

Maybe price is what the seller thinks something is worth, with value being what the market will eventually determine that same product's actual worth. I agree with an earlier post in that appraisers work backwards trying to justify (or not justify) a particular value of a property. Usually there is a sales amount or mortgage refinance amount that is the key factor.

Independant BPOs on the other hand do not have the kind of "influance" effect on a evaluation, so perhaps a competant completed BPO is more objective/accurate. Until appraisers are not "spoon fed" a needed value (unless there is a reason to do a cost approach or income approach on a property) they are ultimatley the same product that simply costs more. Lenders know that, thus appraisers are being treated like the old time hardware store. Why pay extra for something when I can get it at The Home Depot for less?

What's is trulyentertaining is the dance that a BPO is not an appraisal yet reading the posts here it is developed the same way even though most lack any formal valuation education (apparently price vs value is an esoteric discussion). If one only reads this forum, BPOs are superior in quality to appraisals, even though a power user like GMan has indicated otherwise. Yet at the same time agents on this forum regularly bash any BPO as "poorly done" if it stands in the way of their sale, listing, or their own BPO.

Look, I understand what BPOs are, I just don't put them on a pedestal. They are primarily used because of their low cost, not because of their superior accuracy. The BPO explosion is nothing more than the Walmart affect (cheap and fast) creeping into the real estate industry.

I think thats American society as a whole and not just the RE industry.

Hi Brad. Not to single you out but you've proved my point that an agent's view of appraisers is myopic. A good 80% of my appraisal reports are not prepared for a sale so your influence (note that I'm now using bold/italics/underline) comment rings hollow. With regard to sale transactions, an appraiser is bound by USPAP to make reasonable efforts to obtain the sales contract. I personally don't like this requirement. I say let the chips fall where they may as the purpose of the appraisal is to protect the lender. FWIW my opinion of value disagreed with two purchase offers just last month and life went on.

BTW I like the Home Depot analogy. I use them all the time for my rental properties but almost never for my own home.

I have a diamond, a one carat flawless, no occlusions diamond. I have it insured for $15,000, I have a jeweler's appraisal which supports a value of $15,000 based on its grading and color but I paid $7500 (price), which is right? Its sale price or its appraised value?

It's semantics. That's all it is. Be it diamonds, real estate, cars, boats, etc.

A thing is only worth what someone is willing to pay. In the example above the insurance company would be willing to value it at $15,000 and pay out that amount in the event of theft or some other casualty. That's not to say I couldn't buy 2 of the same type of diamond for that value. Get it now?

A BPO is not an appraisal for the simple reason of what the purpose is for each type of report. Until lenders start using BPOs to originate loans, which they can't and won't do, they are similar yet different.


Don't mistake irrelevant for being esoteric.


From your earlier comment, surely somebody as enlightened as you can see how that could be questioned.


Not really gonna argue that. I think the BPO industry could definitely benefit from more training and requirements on the agents who complete the orders. That being said, bad agents wash out VERY fast in this niche.

A pointless example but prove me wrong - I'm willing to pay a dollar for that diamond so that's what it must be worth.

...Did sombody say BPO dance....

Ditty's gettin' jiggy!

Maybe the Troll needs a time out

You GO girl!!!

Even an esoteric savant such as yourself can see that in the first example, the seller actually accepted the price offered. With attitudes like yours, is it any wonder that there is a lot of animosity from agents/brokers towards appraisers?

( cough cough )...so much for the value of the appraisal

Bold/italics/underline my friend. The example used differnt types of value (insurable value vs retail value) but lets not go down the path of the various value types at this time as I don't think the distinction between price and value has registered with you yet. Baby steps, my friend, baby steps.

With what is this in reference to????

We get it but you don't.

You see, I understand that appraisers do different things than I do. I don't hold myself out as an appraiser but you seem intent to tell me that I cannot comprehend what is going on in my market as I am not an appraiser and therefore my experience is meaningless. Bull pucky!

You may offer me a $1 for my diamond but I don't have to sell it to you for $1 or $7,500 or even $15,000. To have an agreement there has to be a meeting of the minds. If I don't like your terms I don't have to sell and I won't. It works that way in the market too. Overprice and the asset will languish, underprice and you may have yourself a bidding war. You know that but you enjoy bashing agents.

Go back to your appraiser forum buds and complain to your heart's content. Not all agents are the same just as not all appraisers are the same.

..and the choir said " AMEN!"

Ah, thank you, the diamond appraisal for insurable value. I'll leave that up to CanDo since it's her story.

I've never said agents don't comprehend what's going on in their market so please do not put words in my mouth. Their experience has value which in turn makes them good sales agents, with the key word being sales. Agents need to be able to do presentations to get listings. I get it. I do listing presentations. The problem now is there is a whole cottage industry of agents who are nothing more than defacto appraisers sans the license out valuing real estate for a fee without any effective intent of securing a listing. So my apology to all if I get a bit ornery when I hear people comparing insurable value to retail value, and interchanging price and value while at the same time telling me how well BPOs are prepared.

Saylor,
Since you like to not only make a point but be condescending at the same time to those you're disagreeing with....



Consider yourself among the grammatically impaired. I do not need to emphasize any part of the previous sentence since you've assured all of us of your superior comprehension skills. Clearly, however, you've shown a bit of animosity and ignorance towards agents and our part in the evaluation process.

I've been on listing appointments where the seller has said "The house appraised for $220,000 so that is what it's worth and where we will market it." Then it is up to me to explain to the seller's that the $220,000 value is meaningless when it comes to selling your home when all the houses in the neighborhood have sales prices in the $180s. The general public also seems to be very confused about value and pricing, perhaps they would be better served with your pricing vs. value arguments since there is such a misconception. That might be a good idea. Then I don't have to spend 20 minutes on a listing appointment explaining to a seller why their refinance appraisal on an overimproved home holds no water against the market.

I've dealt with many appraisers in my time and I've never had the audacity to tell them how to do their job, what comparables they should use, and the like (though I'd love to). Yet, I've recieved phone calls from appraisers asking for comparables, market snapshots, and MLS Grids (and I know I'm not the only agent to have this happen). If the complaining appraisers are the same ones making those phone calls, sounds to me like it's biting the hand that feeds you, eh?

If it was truly a free market, the BPO would be far more dominant than it is now. However, at least among the complainers in the appraisal industry, free market competition is not what they are after. Rather than step up and become more competitve, this particular group of appraisers find it much easier to legislate the competition out of existence.

You might want to bold the section where the seller agreed to sell at that price as well....


What hasn't registered with you yet is you are debating appraisal principles in the wrong profession. You fail to recognize that the same word can have different meanings to professionals depending upon what hat they are wearing at the time (or the purpose for their valuation). Appraisers do that all the time in their evaluation of property. The fact that you either can't comprehend this, or refuse to acknowledge it, is yet another example of why agents/brokers generally dislike the appraisal profession.

You know, for all of the bitching that appraisers do about agents, it's really funny that their livelihood is in our hands. Agents should start petitioning their local MLS boards to stop allowing appraisal access to the MLS. Since appraisers are so much more intelligent than pretty much anything else that breathes on this planet, they really shouldn't have a problem performing valuations without that information.

Boy, I didn't realize there was that much to be said on this/these subject(s). I always thought that Appraisals were used to support New Loans . . . . while BPOs are used mostly to give Lenders a quick snapshot of how the collateral on one of their troubled assets is being affected by changes in the marketplace . . . . to be used as an aide in their decision making on what to do, and how quickly to do it. It's a monitoring tool which can be utilized several times during the dismal period of their involvement with the property.

I really don't think it's much more complicated than that. But maybe I'm just looking at it too simply. Like so many other things in Real Estate, Appraisals and BPOs seem to be the exactly same . . . . but they're different !

yea...Im simple minded too...LOL

The MLS is not for the EXCLUSIVE use for agents/brokers. Take 5 minutes and look at any recent comp book for the list of associate members of your local MLS. I'm sure you will find more professions than brokers that are PAYING members. So don't think appraisers/bankers/brokers/lawyers money doesn't spend like brokers cash. Guess there aren't too many MLS board members on here that realize running the MLS is a business and it takes money to run it...

I haven't seen a comp book in years.....

Realtors are by far the biggest paying members into the MLS. No Realtors, No MLS. It's great that others can contribute, though to be honest I've never seen a banker as an associate member in my neck of the woods. No one ever said that broker's cash was king either, that's a blanket irrelevant straw man statement. Let's not forget who the sugar daddy (or momma) of the MLS is though.....it's the Realtor.

That is their business.

We have many Professions represented as Affiliates in our Board of REALTORS®: Appraisers; Banks, Attorneys, Building Inspectors; Insurance Agents; Mortgage Companies; Non-Profits; Investment Advisors; CPAs . . . . while very few find utility in participating in the MLS. As a practical matter, ONLY Real Estate Agents and Appraisers access the MLS Data; BUT ONLY Real Estate Agents manage the Data on the MLS.

Being an Affiliate on the Board of REALTORS® and being a Subscriber to the MLS are two very different things.

This isn't about bpo's,ethics,correct values.

Let's be real this is about the dollar bill. A fight for agents to work for less money for volume and a fight for appraisers to charge high fees knowone wants to pay.

Appraisers bottom line is if you eliminate agents from bpo's the banks and everyone else will just create something else. There are so many instances for valuation purposes where a full appraisal is not needed or warranted.

If these are the facts then regretfully you've come across a poorly developed appraisal and unfortunately handling it comes with your job. Likewise appraisers also have to contend with the same situation with the general public when an agent told them they could get an unrealistic amount for their home. Having been on both sides consider this a wash in the amount of time expended by each profession.

Nor have I had the audacity to tell an agent how to handle their sale. As far as phone calls, you will definitely get a call from me if there is an accuracy issue in your MLS listing or state there were seller concessions and then fail to say what those concessions were. As far as appraisers requesting comps/snapshots/grids I personally find that unacceptable and a violation of the geographic competency requirement of USPAP. Sadly, expect far more of these types of requests now that the HVCC is in place (perhaps I'll start an HVCC thread!).

RE sales and appraising are licensed professions which by their very nature are not true free markets. And therein lies the rub, agents want to provide valuations for a fee without an appraisal license. In the spirit of a free market, would you be in favor of individuals lacking a sales license, appraisers perhaps, selling real estate?

PS In response to your less pointed post, no bold/italics/underlines were harmed in the writing of this text.

Your answer is "Yes, I would" and given how many agent former appraisers I see nowadays, I think this point is becoming moot. The more regulation, the more administration, the higher the costs to the buyer and less of a return to the seller. Oh yea, the more money that goes to some beaucratic body that hasn't a clue about the field. That, however, is certainly a topic for a different thread.

Agents provide valuations by the very nature of the business, with or without a fee. The appraiser's in question would rather have their customers assume a higher cost it would seem to simply create a bunch of extra unneccessary data that doesn't serve the lender's purposes (when they need a BPO) and would ultimately result in more paper shuffling. BPOs simply provide a more cost effective, to the point service that an appraisal cannot.

The new strategy of the modern era is, if you can't beat your competition.....legislate it into submission.

The opinion of an experienced real estate agent carries a lot of weight as far as providing BPOs , as in any profession after a while a person can develop almost a sixth sense about the area of their expertise and so the BPOs done by experienced real estate agents (the honest and competent ones that is) can be a good representation of the constant changes and fluctuations in the market for a certain neighborhood or area that they are familiar with, the problem arises when these evaluations are done by new or inexperienced agents or by those who want to influence the outcome of a sale.


(not meant as professional or legal advice)

-

Your right about experience...I can spot a sad house a quarter mile away...

No doubt that you are experienced in your profession, but it’s also your intentions that matter, what sets you apart from others is whether you want to use your knowledge and experience to help others or cause them harm.


An experienced and knowledgeable agent + good work ethics + high level of professionalism and dedication + good intentions = good BPO

(not meant as professional or legal advice)

-

Mr Appraiser,
You seem to have the impression all Realtor does is "sell".
In reality we evaluate and assess the potential $ value a property may sell for on the market. Call it a CMA call it a BPO; this is the core of what a Realtor does; working with a homeowner or an AMC.
Because we perform this role daily (talking to real sellers/buyers consistantly)we become skilled in evaluating what features and attributes and locations influence price and therefore are skilled at obtaining a value. In addition to this information we review comparable listings, solds, pendings, trends (similar to an appraisal).
Oh and yes, if we have obtained an accurate value, the home sells or the AMC doesn't QA the BPO.
But selling is only a fraction of what a good realtor does.
CMA's =BPO's we done them forever-no appraisers cared! Why are we suddenly unqualified to do them now?
Could it be because the industry has embraced them and we are replacing appraisers? Yep, that would be it.

From what I gather, both the bpoer's and the appraiers on this thread are doing their own work :)

Let's not forget about the appraisers being allowed to have registered trainees. And lets not forget that some bpoer's have their picture takers :)

When it comes down to value and pricing, they are different. Obviously they are going to be different. Where in the world do you find in an appraisal the Repairs section ??? Where we, as bpoer's can list repairs based on the prices we got from contractors on all those roes we've done lately ... do you think that the appraiser really takes the time to list all of the repairs required ? No. They can't ... because they have guidelines ... and they normally think that those are set in stone !!

And one more thing ... there are many bad appraisers out there.

BUT ... there are more very bad bpoers! That is what the industry should concentrate on, and not just banning us from existance !

All of us, that do good BPOs are here, and WILL stand our ground as long as we can. Don't think the investors/banks will get rid of us too soon though :)

They do depend on our work ... and besides, our opinion, at that date and time should tell thm what we could sell and market the asset for !! At any given time ! They do rely on us ... more then appraisers want to think !!

Oh ... and BTW ... if it's not going to be called a BPO ... then ... maybe it's going to be called a Property Marketing Review :)

LOL ... whatever ... when it comes to us being unbiest ... US ... the ones that really do those bpos and work those reos at the same time, I think that ... we are the most relaible source for distressed asseets ... and anything else, is just water under the bridge !!

I recall there was a lot of discussion recently from a Nevada agent about appraiser's efforts going on in their state. Score one for BPOs. Bill is being signed on Monday and takes effect July 1.

http://www.leg.state.nv.us/75th2009/Bills/SB/SB184_EN.pdf

I apologize if the update was already posted and I was asleep at the wheel.

Water under the bridge: any refinancing, HELOC or 2ndary mortgage market buyout :)

There are so many reasons why appraisers are used, BUT ... there are many more reasons that bpoers are used ...

Don't you think that the 2ndary mortage market is not smart enough to understand that bpos are a good thing ? They are going to buy an asset now ... just after 3,6 months after loan origination or just after 3, 6 years after that. Doesn't make a difference. We are reliable because we don't have a predetrminaded price in mind ... all we see is the current market based on competition. After all ... we are Realtors, and our goals are to sell, and sell NOW !!

Some may have the experience required to deliver a good BPO, some won't ever understand what the reason for a BPO is.

BUT ... I had the chance of learning that there are some very bad appraisers out there too. And them, as an industry that relies on ours so mutch, to go to the extent of denying us the right to do our BPOs (CMAs) is just ridiculous !!

We, as agents, have done this forever, until the mortgage industry, the local states, and the federal government felt like we should be regulated ... and for good reason :) We're no angels :)

So I say ... Don't ban the appraisers :)

Let's just ban the poor appraisers and bpoers :)

Maybe that will make everyone happy !!

Only trouble is: how do we find who the poor appraisers and bpoers are ???

Any comment on that issue ?

BTW: brad34695 .... related to your original post for this thread

"BPOs, the role they play in the valuation industry and their legality are being called into question. We at Pro-Teck know that BPOs are a tremendous resource in conjunction with other valuation methods and want to make sure that they continue to be an option."

They are an opinion! Of price now and within the normal marketing time for the subject !!

I personally got a phone call from Pro-TecK wanting me to increase my bpo numbers on an extrordinary circumstance, where the house was assumed to be bigger in size, number of bedrooms & baths. I did this and I was questioned by ProtK for my value being below properties that have mare garage space and better amenities ?!

So ... I tell you this !! No matter who challanges the new appraiser move against the Realtors doing BPOs, thrust me ... we as bpoers are going to prevail. And that is because of individuals like me not wanting to raise my value by the $20K that ProtK was asking for !!

That is my 2 cents about all of this mess :)

Just reviwed that BPO and it was just $15K adjustment wanted by the ProtK qc person. Well ... even that was enought to question why was I employed for ?

Was I supposed to give an extrordinary circumstance of more than requested in the order ? Because if I was, I didn't catch that part, but definately got the part about the larger square footage, number of rooms, number of bedrooms and baths

LOL ... how could I overlook such a thing ?!? LOL

So ... if they wanted me to consider extraordinary circumstances for all of those superior characteristics that those comps had, they should've said so

LOL

I can't manipulate the market. I give you what I find ... and then tell you the bad or good news - The adjustments

Oh well ... all I can hope for is that some smart Realtor/Broker will have enough lobbying power to get us regulated for all the BPOs we do

Maybe one day NAR will wake up ad realize that there are more bpoers out there then Realtors ... LOL

That will definately shut the appraissers mouth about our right of doing those BPOs (CMAs) or not !! (and I'm one of them ... them appraisers who complain about bpos ... my only defence is that I truly believe that apparisers should be required to hold a real estate sales license and actively sell real estate or actively engage in the real estate sales business ... like a non competing broker).

It's not our job, as realtors, to weed out the poor appraisers and bpoers. It's the job of the companies who order the reports. A company receiving a report from an appraiser/agent who subsequently discovers that person fabricated information, used photos swiped from someplace else and didn't actually view the subject, didn't follow the directives requested, etc, can cease using that individual for future work.

I trust the judgement of these companies, some of whom I've talked with or received correspondence from, who recognize when they've received inferior work. I also trust them to make a judgement call about working with those who provided inferior work.

I agree with that neudot. It wasn't intended for us as realtors to weed out anybody.

My main concern is that something else will have to be done before we are going to be out of this game, and that is more education and experience requirements for realtors that do bpos.

And on the other hand, appraisers that have trainees or assistants (depending on local state laws) should not be allowed to let them work on the comp selection, paired comparablabe, cost approach or even the depreciation approach until they have at least 2,000 hours of training and constant work.

I understand that appraisers have at least 100 hours of licensing requirements, but those don't equal the experience we aquire with doing our first 100 bpos.

Been there, done that appraisal education ... and also overexceeded my minimum of 100 bpos years ago.

Not to throw more fuel on this fire (but I will); I recently sat in on a Disciplinary Hearing regarding a BPO that had been prepared by a Real Estate Licensee with a Suspended License (suspended for another totally unrelated infraction). Another Agent (who happened to also be an Appraiser) in his own Office, had filed a Complaint with our Real Estate Commission regarding the propriety of this individual completing a BPO while his License was under suspension. I would not like to be working in that Office.

The case was "DISMISSED" because it was determined that providing such Opinions is not considered the provision of Brokerage Services to the General Public, and is thus not a regulated activity for the Real Estate Commission. Rendering Opinions is a form of free speech and it is incumbent upon the BPO Firm hiring the Individual to satisfy themselves that the License (Broker, Salesperson or Appraiser) they are relying on is still intact and is not in a Suspended or Revoked status. Our State doesn't say that you need a active License to render an "Opinion".

So I agree with neudot. Every State is free to develop their own Rules and Regulations; and I gather that some States want to regulate these activities which do not involve Originating New Loans OR the Marketing and Sales of Real Estate . . . . others don't want that additional burden (especially not during this time of State Budgetary Crises).

perhaps some of our orders are QCing other reports and vendors....I would gladly do that all day long...of course for the right price...or I mean value...Im so confused...LOL

Leave it to the companies we work for to weed out. The last thing our industry needs is more government interference telling who can do what, when they have no idea what the reality is on the ground in the first place.

ech0es - if you have had the appraisal training you are well aware that the training goes far beyond that of any training you get by doing bpo or cma, more akin to comparing apples and oranges.

In BPO - we use our skill sets to follow the directions of the company we are working with, whereas no 2 are alike and there are no specified guidelines we have to follow, only basic principles.

All together different on appraisals, whereas no matter who an appraisal is performed for, they are required to meet very specific guidelines.

In my opinion - it would be very easy for appraisal boards to audit appraisers to weed out those that came in 1-2000 over the contract price, year after year.

Who is going to audit the bpo side - with no specific rules. other then those of specific companies, it is completely up to the asset management companies to weed out the people they don't want to work with, and that doesn't necessarily mean the least competent, but probably the people that do not meet their specific criteria, and that could be anything they want it to be.

As far as what appraiser trainees not being able to select comps, etc for 2000 hours - lots of laughs - that doesn't make sense but it is funny. Trainees usually have a minimum of around 240 appraisals they have to perform under their supervising appraiser, and take additional 100 hours +- of courses, above and beyond what was required to sit for their initial exam, just to be able to sit for the appraisers exam. And if I remember right - the state gets to select 3 appraisals from the trainees file to go over before they are even allowed to take the appraiser's exam. I may not be exactly right as I have slept since then, times have changed, and every state did things a little different.

There is no such training or requirements for bpo, if you have a real estate license, a digital camera, and you can fog a mirror, some asset management company will give you work. Developing a business from that point takes a little more effort, but the cost of time, money and education needed is very small compared to appraisals.

Ending - appraisals and cma/bpo are too often compared to each other when they shouldn't be. They really are different species and cannot easily be compared. Appraisers want to blame someone else for their lack of work - hey - lets blame it on the real estate agents doing bpo. What we realize is that they would be far better off policing their ranks and developing better, quicker, cheaper, more streamlined products to market. The Appraisers, bless their souls, have some major obstacles to overcome, and shifting the blame and making issues out of bpo will not clean up the mess they have made for the past 10 or so years.


Been there, been a part of and done that - too

WOW! Great discussion-I agents on this board are on the right track! I can't get this type of feedback in my office as everyone is in the old school still trying to sell real estate like they did in 2005! Thanks you are making me stronger!

I'm taking the liberty that by Mr. Appraiser you are referring to me. I know all too well what occupies the time of a successful agent being that I've held that license for nearly two decades and currently have several agents under my supervision.

This issue isn't really about whether agents are qualified to provide valuations but that they are providing that service for a fee. I've said on more than one occasion, including a previously in this thread, that expertise in valuation is part of being a good agent. Do all the BPOs, CMAs, market surveys you want in your daily activities in your pursuit of aiding your clients with their real estate transactions. If an agent needs up front paid motivation to make a pitch to a client for a listing it tells me they aren't really serious about obtaining that listing, just collecting a fee for an appraisal-type service.

Skill set aside, the difference between an agent and a layperson assisting in a real estate transaction is that the agent can legally charge a commission/fee. Why is that concept lost on agents who want to provide what are effectively appraisal services for a fee with out an appraisal license? If agents want direct compensation to provide a valuation service then let them get an appraisal license. Most here, based on their own words, are more than qualified to be licensed appraisers in short order so why not add another arrow to your quiver? I can tell your first hand it's a great asset to have both!


Sign me Saylor, the licensed appraiser and licensed broker

From FREC (The Florida Real Estate Commission)

Licensees can perform all duties with right for compensation:

Advertise
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange

This is known A BAR SALE, and addresses said issue.

Please provide a direct citation where agents can appraise in FL.

The FREAB (Florida Real etstate Appraisal Board) does not allow licensed appraisers to do BPOs without also being a licensed agent. See page 4 of this Link for details.

You need to keep that discussion to your own state. A real estate broker in Texas "means a person who, in exchange for a commission or other valuable consideration or with the expectation of receiving a commission or other valuable consideration, performs for another person one of the following acts:"

"...(v) appraises or offers, attempts, or agrees to appraise real estate..."

You can find the other items by reviewing the Texas Occupations Code, Ch. 1101. http://tlo2.tlc.state.tx.us/statutes/oc.toc.htm

How many times are you going to be wrong on this issue? You haven't made one correct argument yet.

Actually CanDo presented an example where she defined value as being what someone was willing to pay and I only pointed that out by offering $1. It is possible that $1, $7,500, and $15,000 are all correct valuations based on the definition of value used and hence my statement that it was a poor analogy to introduce to this discussion. BTW I do see this as a discussion and based on my personal experiences, outside of this board, I've never felt there was animosity pointed toward me while wearing my appraiser's cap or talking to agents wearing my broker fez.

Florida Statue 475.01
Below is a link and scroll down and see paragraph 1 subsection A

While I could be wrong, its my hunch this is why BPOs are legal in Florida and are protected by state statue.

http://www.flsenate.gov/statutes/index.cfm?App_mode=Display_Statute&URL=Ch0475/ch0475.htm

Brad is right, however, here is more information and I am going to just quote the book:

"Florida law requires that all appraisals (regardless of whether the assignment involves a federally related transaction) performed by real estate appraisers and real estate licensees conform to USPAP. Real estate licensees must be familiar with the standards."

...and, of course, only certified appraisers can perform appraisals on federally related transactions.

"Real estate licensees are cautioned that just because a transaction is not a federally related transaction, it does not mean that real estate licensees are allowed to provide the appraisal services. FHA and VA transactions and appraisals for loans sold to Fannie Mae and Freddie Mac are not federally related transactions. However, Fannie Mae, Freddie Mac, HUD and the VA require the use of state-certified or licensed appraisers for all loans with which these entities are involved, regardless of the loan amount."

So, yes, in Florida, real estate licensees can perform appraisals but they need to conform to USPAP standards and can not be federally related transactions (this last part is federal law not just FL). Also, a state certified or licensed appraiser is not required if the transaction value is $250,000 or less (with the exceptions noted above).

You need to go back and re-read her example because your counter-argument fails to measure up. CanDo's example showed that the seller accepted the $7500. Your example was just an offer of $1. There is quite a bit of a difference there. If we wanted to get even more ludicrous, why don't you just offer to take the diamond off of the seller's hands while asking that they (the seller) pay you (the buyer) $7500 to do so? Just because you make the offer, does that make it worth -$7500? I don't think so. Again, I will repeat myself, your argument is purely from an appraisal point of view and does not apply to a discussion with real estate brokers. Nor is it really applicable to how a real estate broker values a property. It is possible that the same word can have different meanings depending upon your profession. It's amazing how hard it is for you to grasp this.

8 out of 10 real estate agents believe that 'USPAP' is some form of gynecological exam.

You mean it's NOT??????

Now they tell me...OMG, how wrong can a girl be?

..then can someone explain the stirrups?

Stirrups are used when you saddle up and go picture taking, everyone knows that!!!!

Why, what do you think the stirrups are used for?

LOL..I was just checking, I could have been wrong

I wonder why Saylor has not responded to my reply of him wanting a "direct citation where agents can appraise in FL."

Cat have his tongue???

It seems to me that a BPO is like a snapshot, a split second in time forever frozen on that one little page. If you have a great photographer the result is postcard worthy. If, on the other hand, you have a someone that just likes to snap pictures the result will probably be a blurred immage. And so, the more I learn about this new Bpo/Appraisal trend; the more I realize that BPO's are like a snapshot where an appraisal is a panoramic of the market and alot depends on who's behind the lens.
However, lets be clear BPO's need standardization and should follow basic valuation guidelines. Otherwise, we're build a photo album fully of poloroids.

While I'm a cat owner he hasn't caught my tongue - not yet anyway.

Just another busy work day after taking Sunday off. Thank you for the citation. I have not had time to read through it in detail. I wanted the info because agents are usually restricted from calling their work an appraisal unless they have that license also. And while I am most interested in CA, I do like to see how other states operate.

CanDo mixed and matched different type of values implying one was superior to another to make her point. I only pointed that out the misnomer. With regrets to BPO PRO for my poor grammar skills, CanDo said "A thing is only worth what someone is willing to pay." This is not a definition of market value but of the buyers value in use. This isn't an issue of words having different meanings but of the meaning of words. CanDo implied the appraisal for insurable value was wrong because it wasn't market value when in fact it could be spot on and supportable as insurable value. Likewise, the value in use to me is $1 as I intend to never have the need again for such a gem. No doubt many agents here grasped the concept before I pointed this out and I don't want to belabor this anymore because it's off topic. Let's just say it CanDo's post was a less than ideal example for this thread and move on.

Saylor

Oh dear! It doesn't matter what item I used as an analogy (you can look the word analogy up in the dictionary!), it could have been a house, a car, a prize-winning bull's golden gene's, the point is/was each thing has a "value". To arrive at a value, there is an appraisal. Based on varying criteria unique to the thing being appraised. The value isn't necessarily based on "replacement" value and not all appraisal methods will work in all situations. That value may or may not bear any resemblance to what that particular market may pay for that particular item. It is a definition of value, especially in real estate, that a property is worth what a willing buyer is willing to pay. It's the definition of an arms-length transaction. As to my analogy of the diamond, it stands. It has a value ($15,000), it can be bought on the market for $7,500. You really seem to have a hard time with this concept.

I know that in my MLS there are currently a lot of agent only comments stating something to the effect that there is a recent appraisal and the property is price XXX $$$ under appraisal. That's lovely, but who cares? If no one buys, it can be valued anywhere on the spectrum, it still won't get sold unless there is a willing buyer at that value. No buyers at that price means it's overvalued.

Hi CanDo, my apology for making you gasp.

All I'm going to say is yours is the first definition of market value that I've seen that excludes mention of the seller, and it's not necessary for a transaction to be arms-length to be market value (but that another topic for another time).


BTW, great avatar.

Interesting article in today's Boston Globe.
http://www.boston.com/realestate/news/ar...ostPop_Emailed1

That is a very interesting article and thanks for providing the link. I didn't see BPOs mentioned anywhere in the article (unless I missed it) and what I find most interesting is appraisers in this article are blaming rapidly falling values on market trends rather than BPOs being the primary cause.

I truly think that market trends dictate values and we all know that something is ultimatley worth what someone will pay for it under normal circumstances. For the exception of cases of outright fraud, buyers and sellers alike determine a home's value. Yet while appraisers view BPOs as a threat (which is something I understand), I guess we'll be the scapegoats when the oppertunity permits it.

OMG! Appraiser accepts order that's almost 200 miles away from subject!!!
Quote from the Boston Globe regarding 3rd Party Companies ordering appraisals:
The new rules are intended to prevent the inflated appraisals that contributed to the national housing crisis. But some real estate industry officials worry the rules will push housing prices even lower.

For instance, Sousa said, appraisers hired from a pool of workers now may travel further distances to do their work, often working in unfamiliar neighborhoods. Also, he said, a prohibition on lenders and mortgage brokers discussing a property's value prevents simple negotiations to reconcile prices differences of a few thousand dollars.

So here is what happened to me this week... I am furious!
I sell a Homesteps property and the buyer's loan officer orders the appraisal for the FHA loan. Appraiser calls me to arrange to meet him at the property and wants to know if I have comps??? Can't meet him (conflicting schedule but he gets access with combo code). This is a condo in a large complex with sufficient number of comps and located in a typical suburban community. Appraisal was completed in a few days and I hear from the loan officer that it came in at $300k which is $20k below the purchase price. I ask him to send me a copy so we can forward it to the Asset Mgr to review for consideration of a price reduction. I COULD NOT BELIEVE THIS REPORT!!!
1) Appraiser'S address is more than 150 miles from the subject! Buyer's Invoice showed a $75 charge for Long Distance Trip Charge!!!
2) Appraiser had WRONG borrower name (not mispelled... I mean entirely wrong name)
3) Showed Total Room Count as "4" but it's a 4 BR unit, so WTF??? No Kitchen or LR?? Oh, but all comps included LR & Kit in the total room count!
4) Adjustment Comments: He said $2 per sq ft for Lot Size (this is a condo with an undivided interest in the parcel, so what lot adj???) Also, the report is on the Condo Unit Report which has no place for lot size.
5) Analysis/Comments: COMPLETELY BLANK!! I mean "zero" comments!
6) Prior Sale History section: Here is what he said... "ALL OF THE COMPS DOES NOT HAS ANY TRANSFER WITHIN A YEAR"
7) Unit Description Comment: [i]Here is what he said...[/i] "SUBJECT PROPERTY HASTE SUBJECT PROPERTY IS IN AVERAGE MAINTENACE CONDITION AT TIME OF INSPECTION. PLEASE NOTE APPRAISER IS NOT A HOME OR ENVIRONMENTAL INSPECTOR. THE APPRAISER PROVIED AN OPINION OF VALUE." (Note: This is not a typo on my part... this is EXACTLY how he wrote his comment).

I am dumb founded! There were more issues on the report but these were the big ones that jump right out at ya. Obviously I can't forward this to the LA to send to the Asset Mrg. The AM would laugh at it and put the unit right back on the market (and I wouldn't blame him for doing so).

So now I had to spend aggrevating time to produce a "rebuttal". The loan officer should be doing this but I knew my rebuttal would be more thorough based on my BPO knowledge & previous yrs Underwriting experience. Received a call on Sat from the 3rd Party company to discuss my rebuttal.... (I thought this was VERY unusual... I would have expected him to discuss it with the loan officer). Anyway, he was apologetic about the inferior quality of the report and said he'd get in touch with the appraiser on Monday to review it and clean it up. I didn't dispute whether his value was justified or not... I just said this appraiser does NOT know this area or market conditions whatsoever, and the integrity of the report falls FAR below standards. I'm dying to see what happens!

So is this what we can start expecting now that 3rd Party companies are ordering the appraisals???? If so, we're all in for some rough times ahead. I'd like to report this idiot... where should I do so???

Pacific, if you check back in, this is where you file the complaint:

http://www.orea.ca.gov/

Good luck!

Cando... thank you for the link. I think it has guided me to the appropriate source for complaint. As soon as I receive the revised report, I will send copies of the original and the revised reports along with a copy of my rebuttal. Hopefully, appropriate action and investigation will be enacted on this appraiser.

Thanks again!

WOW, I am so happy to see so much discussion and thought going into this subject. It warms my heart!!!!

I don't understand your post Gman... are you an appraiser???

An appraiser friend of mine indicates he and all the appraisers he knows are extremely upset with the HVCC for reasons such as what Pacific Breeze has indicated, and it looks like they are working to have it overturned. Here's a link to some discussion about it.

http://www.appraisalpress.com/news/articles/hvcc_the_cure_is_worse_than_the_disease?

Having an appraiser who is based out of an office a hundred miles away is not new or because of HVCC; this is a longstanding problem in my area. Appraisers unhappy with HVACC is not new either they lobbied extensively to delay the implementation.
If you read the above link there are numerous references that BPO's are not restricted and appraisals are yada yada..kind funny cause BPO's actually are assigned just as appraisals are now through a bank or management co v the loan officer, realtor,etc that might coerce a value from us...they complain that part of their few is absorbed the distributing company..gee, how's that feel...

This is the biggest complaint appraisers have with HVCC. They don't care about the quality of the appraisal--just that they will get paid what they are used to. Welcome to life!

Part of the HVCC effects all loan brokers, agents, appraisers, etc. I suppose you do not care because you are agents and are not looking out for your clients best interest, just your commission!!! You should care, because haven't you noticed your sales values are not coming in? Appraisers are now allowed to actually determine values as they are, with no value pressure. It sucks doesn't it ??? You all are so funny because you only see things from your side of the fence. You never look at the other side. Please take a step in another professionals shoes before you make ridiculous comments. All of the honest appraisers want to make the deals work but not at the expense of the national economy. Appraisers have been under fire for all of the "crap" that has been happening, but let's be honest, everybody has had a hand in it. It is ridiculous to assume that appraisers were soley responsible for the problems we now have. I will agree that appraisers played a large part in the catastrophe but most of that was due to crooked loan officers, appraisers, banks, etc. I think all of us honest people in the real estate field would like to weed out the low lifes, just tell me how and I will join!!!!!!!

Is that in response to my post??? If so, it doesn't even deal with what I was talking about.

Those that go around preaching that they are righteous usually do so not so much to convince others, but to assure themselves. It's those that act honesty and ethically without being "vocal" about are usually those that back up those actions IMHO.

Well said Gman, although I believe there is one very important segment of the real estate industry that you left out - the new home builders. Here in Texas they built "so-called" affordable home subdivisions and used their own loan companies to offer "special" loans with all kinds of added fees. Then they hired their own appraisers to make these added-fee loans work. The minute the home owner moved into their new "affordable" home, they were up-side down because the loan they had, which was usually and adjustable loan, was more than they home was worth. Then the next year when the loan went up - someone in the household lost their job, the loan was not affordable, and the home could not be sold - instant foreclosure or short-sale. Here in Texas we've seen many subdivisions with over 50% foreclosure where the builders were still building and selling new homes. Now these same subdivisions have over 80% foreclosure/short sale rates.

I also know many honest, hard working-appraisers who take their licensing requirements seriously. Unfortunately, due to the pressure that has been placed on them to make loans work no matter what, they will now only work on commercial appraisals. I'm not sure this is helping any of us in the residential side of our profession.