Short sales and foreclosed properties are currently causing depressed property values in cities across the country. Well, that’s not news to any of us.
But now, some are now complaining that BPO’s or Broker’s Price Opinions on short sale properties should not be done by local real estate agents. A broker’s price opinion is just that, an opinion of the current value of a property based on comparable sales, typically within the last three months, in the same area as a subject property.
Today, lenders that have an owner requesting their home be short saled are hiring local real estate agents to perform these Broker’s Price Opinions. The agents are paid varying fees per opinion, depending on where they are in the country. Fees can be anywhere from $40 per report and up.
A short sale is when a seller negotiates a lower dollar amount than what they owe as a payoff with their mortgage company. For example, a seller may owe $150,000 on their current home. In today’s market their home may only be worth $100,000. But, due to extenuating circumstances; financial hardship, job loss, death, etc, the owner asks the bank to take less than the payoff amount for their home. So, the bank may agree to accept the $100,000 as the payoff. The bank may or may not require the owner to sign a promissory note, indicating they will pay back the $50,000.
The short sale lenders are using licensed real estate agents for their BPO’s to save money, as a typical appraisal on a home can be $300 and up. Some appraisers are discontent that they are not being hired to perform these “price opinions” as this is what they are licensed for.
In May 2009, the National Association of Realtors will take a stand on whether licensed real estate professionals should be performing these BPO’s.
Do you think that licensed real estate professionals should continue performing Broker Price Opinions for these lenders? Or should the lenders be hiring licensed real estate appraisers for the job?
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