I just got a rush BPO order on a home that is currently listed and under contract. This is an exceptionally nice home, but in a crappy neighborhood. I mean, this is crack house city! There are plenty of comps in better neighborhoods, but the surrounding properties have been selling for about 50% under the list price on this home. What would you do in this case?

Tough one. It'll take time, but check all solds, even ones that might be a little outside the norm requirements of sf, age, style, and see if there are any in the neighborhood that are comparable to the subject house as far as upkeep, udates, whatever.

I have had this happen, and as long as you explain, in detail why you used what you used, it should be OK.

What, you looked at the neighborhood ??? I thought we weren't allowed to do that anymore

If it were me, I'd use a comp right by it and another more like it and make notes... but I'm not sure that's the right answer. $5.00 says you get a clarification request no matter what you do.

use comps within the neighborhood.....

Remember the 3 rules..

Location, Location, Location

1. Do you have a bpo with one or three comps needed?

2. If you have a bpo that requires one comp (like TU) and you have solds oon the same street or vicinity; I say use it, but give the nicer house a little more value.

3. If you have a bpo that requires three comps (like CC or AVM), I would use at least one comp on the same street or neighborhood, one comp in the better neighborhood and one in-between.

I guess the bottom line is you cannot "totally" ignore the comps on the same street or in the same vicinity or neighborhood; when you do a purchase or refi, the lender will not ignore them; so you shouldn't as well.

If you do ignore comps in the same vicinity and the lender finds out about them, he will probably kick the bpo or appraisal back and they should.

I have this situation often. I go back 1 year and can not find comps that bracket the price or justify the value. I send the best I have and explain.... If I search back 2-3 years I can find perfect comps! I have been sending a separate e-mail or attaching these oldie but goodie comps and making note of the appreciation. I once had a lender request new comps closer to the subject. I did the whole thing over and I was not happy with the comps I was using. They sent it back again. The AM agreed that I could e-mail every single sold/active property in the past year. this worked.

Treebird,

You are giving awful advice and you are not doing anyone a service by using comps 2-3 years back.....that is unheard of. I don't doubt that you had a lender ask for newer comps.

On to your answer KY Realtor:

You should go out to neighboring cities and use similar comps to the subject and just make plenty of notes stating the area is not good surrounding the subject and that you had no choice but to go out 3-6 miles or whatever it is to get good comparable listings/sales that match the subject in features but not in location/ desirability.

three year old comps are totally useless to estimate market value of a property. Go out as far in distance you want to find comps that are +/- 20% in SF, +/- 10 to 15 years in estimated age, same type, and less than a year old. I have used comps 70 miles away in comparable communities w/o any question at all.

Real Deal, You did not read orunderstand my reply. I USE comps within the neighborhood and sometimes have to go as far as 20 miles . I SAID, I send a seperate e-mail with these comps that are 2-3 years old. i am in a rural area and also we the homes are only appreciating at 2% per year right now. i dont think I would be recieving the abundance of orders or have anything to discuss on this forum if I used 2-3 year old comp. Paying attention to detail is very important in this business.

To Everyone: I do not use 2-3 year old comps. I send them separately in addition to the BPO. Sorry if I did not make myself clear.

To Everyone: I do not use 2-3 year old comps. I send them separately in addition to the BPO. Sorry if I did not make myself clear.

Okay--here's what I did. (this is CC)
There were no comparable recent solds in this neighborhood, so I went to other neighborhoods within 1-3 miles and found excellent comps sold within six months and used them. In the neighborhood section I mentioned that there were several vacant, boarded, and condemned houses in the immediate area. I also noted in the subject comments the areas that were wrong in their pre-filled in information, (2-car garage, it has none!) I didn't say anything about the crime, the junk, the crack houses, etc.
I usually have no problems, can pick out perfect comps, wham bang, it's done, but this one has me troubled.
Now---I will get back to you tomorrow and let you know if there were any clarifications.
Thanks for all your help!

Oh, and i just remembered to go back and print off my copy in case CC decides to "change" my information later!

I just got a clarification for this job. Did you think I wouldn't?
They wanted me to replace one of the comps with a larger house. I had to go back 18 months to do that. Still didn't raise the value like I know they are looking for. I have already been generous enough on this home for this awful neighborhood, and can't with good conscience give it any more value.