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,
www.carsonvalleyland.com or email us at carsonvalleyland@hotmail.com , 775-781-5472.

3 comments:

mark said...

Thanks so much for writing this real estate blog. There are so many aspects to real estate buying , selling and investing that it is refreshing to read material that is relevant to real estate.

Bravo and God Bless!

ELMO
Real Estate Professional

Anonymous said...

AUGUST 6TH, 2008 AT 10AM

NEVADA REAL ESTATE COMMISSION WILL HOLD A "BPO TASK FORCE" MEETING.

http://www.red.state.nv.us/realestate/agendas/2008/bpo_agenda_080608.pdf

Anonymous said...

The meeting was great! The real estate division is going to propose to the commission that real estate agents are able to complete BPO’s for the purpose of listing, selling real property and for parties making real estate decisions regarding the disposition of real property (short sale, preforeclosure) but never for lending purposes or appraisal purposes.