The bank-owned property sale is fairly commonplace these days. The amount of foreclosures in the Carson Valley is unprecedented, and has resulted in a niche real estate market with unique business practices. When a bank owns a property the sale process is different than when dealing with a private party.
The first difference comes when they value the property. They begin before the foreclosure sale by getting a Broker Price Opinion, BPO. After they obtain title to the property via the foreclosure sale they usually order two BPO’s to determine value. After that they select an agent to list the property with and ask that the agent prepare yet another BPO. During this process the property value usually plummets due to the post-foreclosure condition of the property. With one of the first lender actions subsequent to obtaining title being to turn off all utilities causing the value to continue to drop as the landscaping dies.
Most lenders hire an Asset Manager, AM, to handle the sale for them. The Asset Manager orders the BPO’s, prepares the property for sale, hires the listing agent, negotiates the contracts, and sees the escrow through to close. The BPO Listing Agent communicates with only with the Asset Manager, and primarily via computer.
When an offer is presented it isn’t emailed or faxed to the Asset Manager, rather there is a computer menu that the agent completes by checking and filling in the appropriate boxes to reflect the terms and conditions of the offer. There is also an area for notes so the agent can make comments to the AM to provide some perspective about the offer circumstances. Counter Offers are also made via computer. We have actually received an AM Counter Offer at 6:00 p.m. on a Saturday. That is refreshing as it is in keeping with conventional real estate to keep the negotiations flowing. Historically, bank owned property transactions were a M-F/8:00-5:00 operation.
Once accepted the offer and related documents are sent to the AM via email. They are signed and returned with the AM’s special Disclaimer documents (a must-sign, non-negotiable package) for execution by the Buyer, and the escrow is opened. From there it is pretty much business as usual.
Our Advice: The REO sale process has been streamlined since we last wrote about it. The AM’s are more responsive, act quicker, and are willing to engage in “Ping Pong” negotiations until a transaction is put together or it is accepted that it cannot be put together. The AM Seller has no emotion in the transaction – they are just dealing with numbers and circumstances - which can be a benefit to a Buyer making a reasonable offer. The Seller isn’t concerned about their next purchase, their perceived “loss” since the market dropped, or the memories incurred during the course of ownership. Make a good clean offer that highlights your strengths and you can be making the proverbial “scream’n deal” in no time.
REO’s offer a realistic means to make a good deal today. Their historical burdensome processes are now themselves history. Don’t fear the REO – consider the brown lawn a welcome mat to a green return on your investment.
Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com
Showing posts with label BPO. Show all posts
Showing posts with label BPO. Show all posts
Friday, September 26, 2008
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.
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.
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