Note investor tape review AVM vs BPO

[Chris Seveney]

Curious as to other note investors opinions on this. Get a tape of assets with a column that says “BPO” on it (Broker Price Opinion), but in reality the seller just pulled online AVM’s without putting eyes on the asset

Do you find that misleading on the sellers part?

For me I see a big difference between an AVM and BPO - main difference is BPO someone should have put eyes on property

Thoughts? Or am I just an anal engineer?

[Matthew Olszak]

Not a note investor, but I'd like to comment on the AVM vs. BPO discussion. If the BPO was contracted direct w/ the agent, its much more valuable compared to one done through an appraisal/bpo management company. Having performed a TON of BPOs, I've experienced that many times these firms have a preconceived number based on an AVM, and will only accept BPOs within a certain % of that AVM result. 

For example, multiple times I've toured a home previously because it was on the market or the owner wanted to sell. I included that info in my "exterior only" BPO, which was then rejected because they wanted me to match the interior inspection to the exterior (which was much better than the interior) and ignore my knowledge of the interior. Another time I fought tooth-and-nail was because their records showed the property as a SFH and the listings, tax records, zoning, and personal knowledge showed it to be a 2-unit. And many other times, I've had to fight that even though a supposed "comp" might fall within the mileage restriction, it was outside of the immediate neighborhood and not at all a comp. Each time the final number they wanted me to hit was close to the Corefact AVM.

While I personally wouldn't back down (which is one reason why I do very few BPOs now for the big management companies), I know MANY agents doing BPOs will just find comps to match the # the companies want to see so they can get their $40. So the value of a BPO as compared to an AVM isn't what it seems when these valuation management companies are involved. Further, many of the bulk-BPO agents just use "assistants" in India who pull photos from Google Maps and the like and overlay a fake timestamp, so even then you can't be sure eyes were really put on the asset.