Wednesday, November 28, 2007

Our agent talks about a BPO … what is that?

A BPO is a Broker Opinion of Value. A BPO is used by real estate agents to determine a competitive listing price on a property by showing Sellers what other similar homes have sold for in their neighborhood. A BPO is similar to what agents call a CMA, Comparative Market Analysis. The main difference we see is that BPO forms are usually provided by a lending institution and ask for more property and area detail than does a CMA.

A real estate agent can only perform a BPO for the purpose of listing and selling a property. An agent that prepares a BPO for any reason other than listing and selling a property, and receives compensation, is in violation of Nevada law. In recent years many new agents, or agents with time on their hands, performed BPO’s for out of area lending institutions for a nominal fee. With the plethora of short sale applications and impending foreclosures there has been an increase in demand for BPO’s by lenders. They use the Broker prepared BPO to assist them in determining a course of action. It is less expensive than a “walk through” appraisal by a licensed appraiser, and can usually be delivered to the lender in a very short period of time.

The Real Estate Division of the State of Nevada Department of Business and Industry recently made the real estate and appraisal communities aware of their intention to enforce the appraisal licensing laws. It is pretty simple to determine given the following definitions: “Appraiser” defined: “Appraiser” means a person who prepares or communicates an appraisal; “Appraisal” defined: “Appraisal” means an analysis, opinion or conclusion, whether written or oral, relating to the nature, quality, value or use of a specified interest in, or aspect of, identified real estate for or with the expectation of receiving compensation.” If an agent is not licensed to perform appraisals per NRS 645C, and does so for a fee, he is subject to a fine of up to $5,000. This includes BPO’s if the agent is not listing or selling the property.

Our Advise: In this price-conscious market it is very important that you have accurate value information. The sales and listing data used to price a property must be understood and often interpreted. Knowledge of local issues is important including situations that would invalidate a comparable sale, i.e.- a less than arms-length transaction, or extenuating circumstances that contributed to the action decision of a Buyer or Seller. Appraisers watch the data very carefully as do experienced agents. Agents with little experience, those with the time on their hands to do a BPO, are often erroneous in their determination because of their lack of knowledge. They may not even be aware that they aren’t allowed to do a BPO for a fee.

Good agents and appraisers help the Sellers, Buyers, and Lenders in evaluating their investment. A knowledgeable opinion of value is essential in the real estate industry – just be aware of who is doing yours, what their qualifications are, and what their objective is. It can have a direct impact on your transaction … or cause a lack thereof.

Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, or email us at , 775-781-5472.

Wednesday, November 7, 2007

We are ready to buy … how to we get a good deal?

You have asked the question that is stopping many from acting … congratulations and thank you for doing so. Good real estate deals are available, but it takes work and knowledge to find them or to satisfactorily negotiate one. That might seem contradictory to what is the popular opinion of the market, that it’s a Buyer’s Market, but it simply reflects the price resistance of Seller’s. The art of buying “right” today is to determine which suitable property has ownership that is ready, willing and able to sell to you at a price you will pay.

Some good buying opportunities right now are bank owned houses. The banks have good incentive to sell their properties and are usually willing to look at bona fide offers. It takes time and a lot of documentation procedures to keep their legal department happy, but the results can be worthwhile. An example is our recent sale of a home the bank foreclosed on at $299,000, listed for $259,000 and we sold for $253,000 with the bank paying $8,000 of the Buyer’s closing costs. The Buyer made a good deal by taking action.

You and your agent can find bank owned properties from several sources including , , and . The site tracks government loans, ie.- FHA and VA. On most of these you can sign up for notification when new properties are available. Some have a monthly cost for the service. Your agent likely subscribes so you won’t have to.

It is also possible to negotiate a good value with non-bank Sellers. If there is enough equity, and motivation, many Sellers will consider a reasonable offer. It may be less than their lingering hopes, but with the right perspective they will see the benefit of accepting the offer. Agents can help them with perspective, i.e.- how they stack up in the market, what the market is doing where they are moving to, and what may happen if they don’t sell for another six months, etc. so they can make their decision with confidence.

Our Advice: Don’t try to think for the Seller. Only the Sellers know how your offer will affect them, and what the real value of the offer is to them, from their perspective. Many Sellers and their agents hide the true motivation, their real reason for selling. Your offer may free them to continue with their lives, and only a Seller faced with accepting an offer knows what that offer means to him. Taking action is the only way to find out. In the spirit of “Nevada Real Estate”, remember the gaming mantra, “You can’t win if you don’t play!”. Make an offer.

Don’t get hung up on what others think of the market. Consider you, your investment objectives, and how you can achieve them… today. These are challenging, fun, and rewarding times.

Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, , 775-781-5472.