Realtor and Brokers are NOT APPRAISERS!

Hi Lloyd,

And we wonder why the market has reached this point! Too many chiefs...Continued success always.
Lubertha

Sounds like the bank got a BPO(Broker Price Opinion). Banks are doing this to save money. They pay a Real Estate Agent to pull comps and walk through the property, then give an opinion of value. They pay $50 to $100 for this instead of paying $300 to $450 for an appraisal. Not all Agents have formal training to do this. If you put together the comps that you have, and have the listing agent present this to the bank, you might get them to reconsider. If the list price is that far off, the property will sit for a long time before the bank realizes their mistake. The listing agent sould have some influence with the bank.

Al

Thanks Al! I've talked to the listing agent about this, and i even fax her the copies of the comps, but she said that bank will not budge. Well, i'll talk to her again and she if she can present the copies to the bank and hopefully get a better outcome. As far as the fees being charged for BPO, i have seen from anywhere $200.00-$300.00, because all the homes that i've made offer on them, i've asked agents to see the appraisal before i could even make an offer on them, so the brokers are not only doing this for the money, but for other hidden agenda as well. Thank you though for your time and word of wisdom.

Lloyd

I posted a comment yesterday along this line; I became much more informed last week following an appraisal on a property that came in low; I studied it carefully, called the appraiser and calmly discussed with her my findings. She admitted mistakes( along day)apolgized and the next day send the corrections/amendments to the banker doing my refi. This amounted to several thousands dollars more in my favor.
Now, here's the real thing. . .The appraiser told me that her company has a 'deal' with the bank to do fairly cursory.direct sale or comp approach for a reduced fee; $250 each. Even though I'd prepared a list of upgrades/improvements, she essentially ignored them and just went by the old/ original appraisal; it was a little embarrassing for her, but she corrected it; the point here is that I asked my banker if in the future, I could request the 'cost approach' on new or newly remodeled. They can do this as one of the 4 methods of appraising value. He said,"sure" but you have to pay $400 instead of $250". No sweat, if it gets the value considerably higher, it's worth it to me.
hope this is useful to someone.
Grady...looking crosstown for another good deal

Sounds like you may need to just wait it out.

Al

Thanks Grady, but the fact of the matter is, Broker's Price Opinion is not the same as the real Appraiser. I appreciate the feedback and i'll just work it out with the listing agent and see what happen. I don't mind paying $400.00-$500.00 for an appraisal fees if the appraisal is correct and accurate, but when you have an opinion and not the facts, then that's what i have a problem with. As Al stated above, some broker's are not trained to do this, and thus created the mess we are in right now. I think i know a little bit about the home values in my area now since i've purchase seven properties in the last year, but who are the brokers's is kidding here, c'mon anybody can state an opinion but if you don't have th fact to prove it, then there's no point of doing it. I think the way i look at it, the broker should focus on marketing, selling and buying properties, and APPRAISERS SHOULD DO THE APPRAISAL, simple is that, thanks! Is like if i want to see the doctor who specialize on cancer, they're not going to send me to see the dentist right, thanks!

Lloyd

I think i just might have to do that. Appreciate it very much!

Lloyd

You are soooo correct on your BPO info...kudos. Also, I would like to add to your statement. BPO agents are usually doing 5-10 per day. When was the last time you heard of an appraiser having enough time in 1 day to do that many? You haven't - cause it ain't possible! Knowing this, you should infer that BPO agents are going through these as fast as possible and usually using old reports to support their findings so that they don't have to waste time creating anything new. Also, they are scored by the banks they are doing the BPO's for. The closer their BPO comes to the bank's price the better they score and the more work they will receive. So, in order to make money they do as many as possible per day. And, to stay busy they usually invest minimal effort and come close to the bank's price. This is important for investors, especially those tackling short sales, because the BPO becomes your most important tool. As an investor, you must have a good BPO or RE agent on your team or capable of doing it yourself. Your goal is to create equity or diminish value using the most accurate BPO you can muster and presenting it to the BPO agent when they arrive at the property. Knowing that they are in a hurry, it would do you wonders to have all of their work done for them and explain how you reached your estimate of FMV. You may just talk them into your favor.

Thanks for the info Kevin. I even asked the listing agent to give me the name of the broker who did the apprisal, but she would not give it to me. I only wanted for the sake of understanding and how he/she came about with such number when everything else far below average, but she refused to provide that info for me. Oh well, just like Al says, i might just have to wait it out and see what happen.. thanks!

Lloyd

I believe the best advice is to keep it on your radar and watch for price reductions every 30 days. You may want to submit an offer just before each 30 day mark.

In my area, it is funny that some home owners have over priced their homes based on the market a year or 2 ago. They still believe they can get a premium for a home. I was approached by a townhome owner a few days ago. He was considering selling his townhome for $130k, but the current market is around $95k for this type of townhome. I inquired how he arrived at his price and he stated someone offered him $120k two years ago so it must be worth $130k now. I thanked him for his time but stated I would not be interested in the townhome at $130k.

Thus, what I found it is good to know the market and as Dean discusses in his book to know where the market is trending. That way you can make more informed decisions. I also learned that everyone may base their information on things you can't control. It can leave you scratching your head as you try to understand their logic.

I hope this property works out for you. Good luck and keep it on your radar. Believe and Achieve! - Joe

Thank you so much Joe. You are always the voice of reasoning, lol. Yeah, i totally agree with you, but like you said, i've submitted my offer and if the bank doesn't accept it, oh well i just move on to the next one... I just hope that this so-called expert BPO doesn't do all the appraisal in my area. I would hate for that to happen... Thanks a lot Joe.

Lloyd

Well, i got my offer rejected again, and the agent told me that the bank would not even consider any offer less than $70K. The agent said that she talked to the bank and provided copies of the comps that i submitted and tried to influence the bank to reduced the price based on comps in the area, but the bank would not even budge. She was very helpful and assured me that she did everything she could, but the bank has to do what they have to do. The mean time, she said that the property will most likely be in a sheriff sale by August, and then the bank probably will lose more money if they will take that route, rather than what me and others have offered for it. So having said that, i'm moving on now knowing that i will probably have another shot at it once goes on a sheriff sale. Time to move on and keep that property under radar. Now go close a deal and remember "Faith without Work is Dead!

Lloyd

The banks are trying to get everything they can, thinking that the market SHOULD be what it was 5 years ago.

Yeah, but little they know, the banks greed and AMR rates got us us in the mess were in now, and by no means the foreclosure is not going away anytime soon. I know for the fact that there's another wave of foreclosure is upon us. Look at California, they were the richest state in the country, well, next to NY, and now they are going bankrupt and running around looking for a bail out. We should all invest in CA. Now, go close a deal and thanks for your input.

Lloyd

I agree. You should move past this property and keep it on the radar because it will come down. However, I want to share a little trick with you. In most cases the banks are more concerned with 'purchase price' rather than 'net to seller.' Knowing this, you could always ask for 'seller concessions' to get closer to the deal. I'll use an example:

The RE agent says the bank won't budge below an offer of $70K. You only want to make an offer at $60K. The bank says we need $70K. You say fine. I'll give you $70K but I need 6% seller concessions to make it work. Don't be surprised if they counter or accept that offer instead bc they probably will.

$70K - 6% ($4200) = $65800. Not your ideal purchase price but you can see how seller concessions can help. Usually if the bank gets close to their target price they will allow concessions because they're not as concerned with net as they are with purchase price. Sounds stupid but then again banks have been notoriously stupid over the years!

Hi LLoyd,

Your right by not spending valued time on this. You know what the result will be by the bank's decision to hold out. So you continue on and catch it on the rebound! On your terms and or even better. Continued success to you............Lubertha

Concessions are a great tool and something we should all keep in the back of our heads when trying to negotiate a deal.

Thanks for the words of wisdom!

Vern

Thanks for the information! I guess i've caught up on the bidding war that i've neglected other aspect of investing tools. This is very helpful and i will make sure to use this info on my next offers. Actually, i just made a counter offer yesterday, and if they counter again, then i will definitely use the concession tools. Thanks again.

Lloyd

Thanks for the support and word of encouragement. I'm moving on to the next one and keep the property under radar.

Lloyd

Could y'all elaborate on seller concessions, what are these? Maybe provide some examples.

Sometimes the seller will give monies towards the closing or some repairs etc. Continued success..............Lubertha

Concessions is money paid by the seller on the buyer's behalf in order to help close on the house. This money can be paid for a number of reasons such as: the house may need some repairs, to help the buyer qualify for a mortgage, or because the seller needs full asking price. It is important to know that this money is taken off of the total amount due to seller at close. It is not money paid in cash to the buyer.

Seller concessions have limits. They very by loan program and are usually between 3%-6% of the purchase price. They are usually dictated by the mortgage loan officer. When qualifying someone for a loan, the loan officer will inform the buyer and his/her RE agent what is needed to close a loan.

Example:

The asking price for a property is $100K. The seller needs exactly $100K in order to pay off their mortgage and sell the house. The buyer only qualifies for exactly $100K but after closing costs will need to have $105K and does not have any cash to bring to closing. The loan officer informs the buyer and RE agent that they can make this loan work but the buyer needs to ask for 5% seller concessions to make it work. The seller agrees. The total loan would be for $105K but the seller has agreed to 5% concession. $105K - $5K(5% of $100K) = $100K financed by buyer. Seller is satisfied with their $100K and buyer is able to be financed for $100K.