Okay, this is a constant frustration for me, and this is just one example...
I get a BPO request,property just sold 3 months ago so I assume the note is being sold off. MLS says it sold for $20k more than list price, so I call agent (telling her I was going to use it in a bpo, she assumed as a comp) to find out if more land was included, or what kind of concessions were made. She startd explaining a very convoluted (and possibly illegal) loan transaction that I won't get into here. She said she didn't think it would be a good comp, then asked "What price-range are you needing the comps to be in? Do they needto be at $XXX?" I was stunned. This an agent who has sold RE for years and does well, but has no idea that you don't start a search with a set price? So i told her the basic criteria (GLA, age, condition, etc) and she asks again, what price range do comps need to be. I told her never mind, I'd just look at the mls some more.
So, Value comes in just less than list price was- WAY under sold price, and it gets kicked back to me because comps need to be closer tosubject. I tell them in this rural area, the closer comps were not like the subject, so they tell me they didn't care, use the closer ones. So I redid my report (adding comments that these were not the best comps, butthey were within the proximity requested by the orderer), larger adjustments had to be made,and the value with those innapropriate comps came in about $10k less... I expect toget called onthe carpet for that, too.
So, how can we get agents to understand how our job is done properly, and get the AMs to understand that, especially in rural areas, proximity is NOT the biggest factor in determining value? How would you-all handlethese situatuions???

I am so glad that you have posted your concerns. I have been running into the same problems & I had to just be blunt & back it up with the research I have with the loans that have been made on homes in this area by the same people. Last BPO I had kicked back I wrote the realtors ad word for word from an ad running in our local home book. Basically a slick Eddie used car sounding ad where they say they can get ANYONE a loan and they name off all the credit problems you can have and still can get a loan - NO PROBLEM come on down! Some of these loans are made for 20,000 over the listed value & no justification can be found. Not just one of these has come up but 4 in the past month and same realtors each time. Just bad business, these folks are not keeping their homes for a year or so.
You know something is up because the same realtor sold a home for 80,000 (20,000 over list)& it just sold at auction for 25,000. I would think if they are on the up and up they would buy it back and resell it if they could make that kind of money the second time around, but they will not touch them again I have noticed.
Unfortunately it is just starting on these loans with them & more are lined up in town & are in the process of foreclosure. Everyone knows what is going on but can't understand how it keeps going on with them.
If you find out where the extra $ went off the loan over the value let me know.
Sorry to run on but I get a little aggrivated on this subject!

I was thinking about an early rural BPO I did and another lady doing a BPO on the same subject had turned in her opinion at 40,000 over mine & I was not wanting to adjust the figures. The rep called me and said the lady said a new house in that area has just brought X amount. And I commented that I did not believe it had anything to do with this 65 year old defaced self remodel job with tore out bathroom & rotted floor etc., etc., etc.
It was not what they wanted to hear.
But at that point I realized a few BPO's are based on what the companies want to hear. They look at the sale price and when sold & about what it will take to make a figure to make everyone satisfied if only for a while.
The home mentioned is still on the market and presently 40,000 less than the other BPO originally stated & 4,000 above what I said it would probally sell for at best.
It is a frustrating job doing these BPO's in a rural area but I am hanging in there.
Gosh I wish every house was worth double! I think of the companies that will loose money and of the home owner out of their house and the troubles that lay ahead for them as well.

But how can we get other agents to see that a valuation isn't started with a figure that you find comps to justify? That, to do it right, it has to go backwards from that...
And how can we teach the asset managers and people at the BPO companies that "rural" properties require an entirely different perspective than doing a valuation on a house in a subdivision where every property is identical and half have sold in the last 6 months?
I've been told to remove my adjustments for outbuildings and fencing, as they don't matter to the value of the property. BULL! Tell someone looking for a 100+ acre farm that the barns and tractor sheds and hay barns and perimeter and cross-fencing don't add to the value so he might as well buy a property without all that... He'll go find an agent who knows something about farming. But we see all the time that many people in the position to provide us orders and look them over before sending them to the banks, have no clue. And appraisers have it harder, with the underwriters throwing fits if you mention a "lagoon," "Septic system." or "wood stove for heat."

Have any of you had to educate fellow agents or AMs? How did you do it and did it seem to "stick?"

I just had about the same problem. I came 20,000 under another agent. The other agent used comps that had 24x24 morton buildings on the property and the subject didn't have any buildings. I explained if the subject doesn't have a huge building/barn I don't use comps that have them. The rep wanted me to put an exact price in value on the barn. I told her it's about like putting a price on a house. I told without knowing the specifics of the building I could not put a value on it. I told her the price would depend on if the building was just a building with a dirt floor or if it was maxed out with cement floor, 220 electric, heated, etc. Thus going back to why I didn't use comps that had morton buildings. Why do the companies even bother with a bpo if they don't want to listen to what we tell them. I am a real estate agent not a yes man(oops better be pc or farvv's computer might hack in and flag me)make that a yes person. lol

The last 3 BPO's I did, the owners owe more on the property (up to $60,000) than what my "market value opinion" was. The market here is slow but stable - prices haven't declined on the lower end properties. I spent a lot more time than I should have (for my fee) on these BPO's going over my numbers and comps again and again. Just wouldn't come in any higher.

Somewhere along the line, someone must have appraised these properties for a good deal more than what they're worth.

Shocker!! Appraisers typically appraise based on the most recent sales. In this market they need to appraise on sales and market trends. I think they are forgetting the trends. I am seeing more and more properties in short sale situations and the owners have recently (as recently as 3 months) taken out equity lines and now the homes cant sell for what they owe.

A confession, and a question... I've done this, have you?

The only time I'll go backwards and find comps based on price is when I'm pretty darn sure of the price already, then sometimes I will look for a price in the right range and confirm characteristics second.

Case #1... It sold recently, was on the MLS for some time and I trust the agent. In this case I figure the FMV is pretty much established by the sales price.

Case #2... I have a very close very good comp, but need to find one or two more. Say in a newer cookie cutter subdivision, or better yet a condo complex. Had one of these recently. Got one sold and two listed all for the same price... that's the price for this model in this complex... now I need another comp or two, but none left in the complex...so I've gotta go find some oranges that compare to these apples... I sometimes start my search with the price.

Now I don't always, or even usually start with the price even in those situations, but in these kind of cases sometimes I do. I've cheated that way on one other too... an architectural masterpiece. I mean one in a million, $2M+ house. I really didn't know where to start, there was a lot more to consider that sq ft. So quite frankly, I started from their estimated value. Told my rep, they said go, so I did, it should have been appraised. (Though I don't know what magic an appraiser could have done to find comps for an incomparable house either)

Just pointing out the obvious. It's a Broker Price OPINION. Even when we have a hard time finding comps to back it up, we know the market and the area well enough to tell you about how much a house will sell for on the open market.

We have an open BPO with CC right now. They stated that another agent did a bpo and found comps closer in size within one mile of the subject. I called BS and asked them to send me some addresses with my own note stating that my experience lately has been that comps that other agents are using may not be what they appear if they in fact exist at all. Haven't heard back and it's been a week.

Usually, when I inspect a property, I have a pretty good idea of what the market value would be. BUT, I don't search with that price in mind. I search with the basic criteria like age, square footage, acreage, area, etc, and expand the search as necessary to find comps that are most like the subject. I'd say about 95% of the time, my estimate is very close to what it comes out at, but I don't search for comps using my guesstimated value as the criteria, then making the comps fit what I think the price should be. Yet, it seems like many agents do it from the starting point of the price they want to justify...

Wow....I'm glad I am not the only one who feels this way. Besides having some BPOs changed without my notice I've been challenged on the values because "X" company got a value from another Realtor at $30,000 above what I stated.

Sometimes I feel it futile to explain to someone in CA who doesn't work the business and is not in the market everyday in OH. I've refused to even budge a little on some of my numbers and I'm sure it'll cost me business but I can't pull myself to do it for what....$50-$125.....no way. Lenders shouldn't wonder why their loans are going belly up, they are part of the problem.

Rant off.....

And so are the appraisers who just bring in the numbers in order to keep getting business! It can't be blamed on just one profession- we all have to work with appraisers and lenders in selling real estate, and I hear agents brag all the time that they know the house is overpricd, but they have an appraiser who'll hit the numbers, so the deal can close, and mortgage brokers who, on iffy deals, will assign a certain appraiser and tell them where they need the value to come in... No, I'm not saying ALL appraisers or lenders do these things, anymore than I'm saying ALL agents are idiots about performing valuations. BUT, those who cannot do the job right and ethically need to be educated, or need to be in a different line of work. Whatever happened to "Upholding the public interests?" It may help your seller to get more money than the house is worth, but it hurts the buyer, the lender when the loan defaults, and the legal ramifications are much broader, as well. Why risk all the problems to make a little extra money?

About 14 months ago I did a BPO on a beach front condo. My eval came out at about $425,000 and the owners had paid $585,000 about three month earlier and were hoping they could refi and take out equity. Had a heck of a time with the lender because the borrower had such "good credit" the lender wanted to make a loan and tried to force me to increase the estimated value to $625,000... I refused and documented more exact duplicate comps showing what that specific unit type was then selling for.

Well, move forward 9 months.... the unit is now in default. Lender apparently made the loan anyway.. I have to assume they got someone to say $625,000. I worked a short sale at $378,000. Now I get all the lenders BPO's and REO's but still have to occasionally fight due to the market correction we had due to a major overbuild of more than 40 condo developments in the past 4 years with more than a dozen still under construction including 2 mega complexes with thousands of units.

Can anyone say Short Sale buy the Sea Shore 10 times?

I have been requested to change values or comps several times. I stick hard to my values & we all should if we have done an accurate BPO. After a discussion with one company ordering a BPO I told them I would change my comps but I would have to note in the BPO that they provided the comps. When I actually did that I was told I cold use my comps & value (that was not acceptable in the BPO).

In a rural area sometimes close distance is not the best comparable. I have explained that "like properties" are better than distance. They sent me a long list of "better comparables" in closer proximity from Real list. (or something similar) I ruled them all out becuase most of them were in neighborhoods and the subject was not with a mobile home on one side & a house 1/3 the subjects size on the other side. Some information from their list was incorrect (I beleive MLS in our area over our totally inaccurate tax records) and I let them know. I did change 2 comps but noted that they provided the comps and they were not like properties and better comparable available but I was requested by XXXX to use these comps. They called back and said I should use what I feel is best.

okay, here's a good one...
i get a call this morning from an agent assigned to do a second opinion bpo on a listing of mine. Apparently it was assigned a few weeks ago. She's already been there, took her pictures, etc, but hasn't gotten the info from the courthouse yet and asks me for GLA, lot size, etc. Okay, public record- I can go along with that. THEN, she asks where MY value came in and says it makes us all look better if our values are all pretty close. I sat there stunned for a moment, then said that I couldn't give her that information. She lists lots of REOs and cannot form a professional opinion of her own? I wish some of these banks could see how some of their favorite agents actually do their jobs...

I do BPO's behind of the local listing agents and we do talk about it. We sort of compare notes sometimes. Same thing for my listings and the second bpo person. I don't want my listings to come it at some outrageous price that will make it unsellable-----some agents will do that to you so you won't sell it. If the other person is way off base, I don't change my opinion, but usually we are pretty close.

I agree with ky realtor. You know about what it's worth, so talking to the other agent is just a confirmation. We've had a lot of new people jump in the REO market lately. I can only assume they're the ones giving completely overpriced BPOs when our listing prices come in 40K over what we suggested. We just know it will sit on the market for longer and the bank will eventually accept one of the handful of "lowball" offers (which are actually realistic) that come in.

But what about the confidentiality requirements? Doesn't discussing the value with other agents violate the requirement that I have seen from most companies to NOT discuss value with borrower or any other person?

I had an order last month that I comped out at about $50k less than the listing price- and that is being generous based on the great location. If it had been 10 miles north it would have been $100k less. The form would not accept any price less than listing price, so I put the listing price in there. I put in the section about additional things affecting value that I believed the subject to be overpriced in the listing, and that I felt it was worth $50k less based on my provided comps. They accepted my order, but I never heard anything about the difference in price.

I never punch a price in my searches, only GLA/rooms/age w/in 1/2 mile and then narrow features and expand area from there.