Be Able to Explain Your BPOs, Experts Say

June 15, 2011

With REO valuations, being able to explain any anomalies in comps when compiling a broker price opinion on a property is critical, panelists at HousingWire’s REO Expo said.

"In BPOs, the most important rule is to explain, explain, explain," Jeff Del Rey, senior director at PCV Murcor, told attendees. "If you start out with bad comps, it's garbage in and garbage out."

Mary Jacque Thompson, senior vice president of operations at eMortgage Logic, told attendees that lenders don't want their REO properties to be undervalued. Real estate agents providing BPOs need to be sure that in their price comparisons they are using homes similar in age and style to the home they are valuing.

"In Texas, everyone has pools. If your subject property has a pool, then your comps should have a pool or you should be making adjustments for that," she said.

Whenever including a comparable property in a BPO that is outside the immediate neighborhood, you need to explain that in the BPO report, Thompson said.

Panelists also warned that a red flag on a BPO is when it’s submitted with an incomplete listing history. They said BPOs should always contain a listing history for the last 12 months on the property or the comps. Also, another red flag: A home listed at a lower price six months ago and now valued higher. If that’s the case, the BPO needs to explain the price increase.

Source: “Valuing REOs With BPOs: It’s all About Getting Good Comps,” HousingWire (June 14, 2011).

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