I hope this is NOT TRUE
So I am doing what real estate investors do on the weekend.
You know looking at properties, getting repair bids and meeting new people in the business because if you have not heard this is a people business.
I was chatting up an appraisor that was working on a house I am buying and he said something that just floored me. I really hope this is not true and if it is either just a bad story, a one off event or maybe just some hear say. He swears it is true but I have only met him once so far so I won't bank on it until I check with a few more folks.
I thought the Network on BiggerPockets was the fast and widest way to validate the story. Okay so here goes.
Apperantly several big banks are patting themselves on the back recently because they have streamlined the BPO and Appraisal process on homes. In the past they were spending up to $400 a house to establish value and now they have gotten it down to $100 a house.
Problem is it is all done off site and by a computer with very little checks and balances. The apprasier said he audited 5 of them in the last week just to see how close the value was and he said they were all 40K under market with a couple close to 75K under market.
Okay so I am happy I save $300 but I lose $40-75K. Can banks, services or the government really be that stupid??? I hope not. I hope I am missing something because as a tax payer that is our money they are burning!!!!
If you are an apprasier, agent or buyer and you can either validate or tell me my guy was wrong or just telling a "story" please let me know.
Last wrinkle he indicates the change happend in the last 30 days. I had thought they went to computers and out of town agents along time ago. But again he indicates something changed in the last 30 days. Any ideas???
Good Investing
Comments (3)
Wow!!! Love to be the person who saw the land listed first for 800K assuming that is what the bank wants to sell it for.
Michael Zuber, over 13 years ago
I have heard, and seen, much the same thing - only the results I got and/or were told had the BPO agents messing up on the HIGH side - so as an investor the Desktop BPOs (or Drive-bys) made the bank unwilling to work on my price for a shosrt sale as their BPO agents told them the property was worth at least $50K MORE than it really was. So a potentially good deal for the bank ended up being an undone sale which led to a foreclosure and maybe a purchase way below the short sale offer. However, I don't blame the BPO agents for trying to maximize their time. For $75-$100 there's no eral incentive for them to go to the property to do a real BPO. In another story that is crazy - and the opposite - I work with a realtor who does some commercial BPO's, which of course take a heck of a lot longer. Here she does a BPO for a piece of land in a very high-priced west coast area on a very busy street/ corridor. Her results showed the property to be worth about $3.5 Million. The east coast bank said she was crazy as they had an appraisal from an east coast appraiser for $800,000. She re-did the BPO, came up with $1.6M, and the bank STILL threw it out, then fired her and wouldn't pay her a dime. Go figure.
Julie Falen, over 13 years ago
I can tell you that the price paid for BPOs has dropped over the years --- the only side that I can speak from is the supply of agents doing them is higher --- therefore, the price paid has decreased. Not sure how much the quality of the BPO has changed -- can't speak on that.
Brooks Conkle, over 13 years ago