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What Is A Home Worth? Can You Tell Without Going Inside To Poke Around?

    

A broker price opinion of what a property is worth but the catch is, you don't get to see the inside and really scope the real estate out fully.  Scary situation when money being lended on a drive by opinion?

I think it is pretty loose to have a lending institution make a loan based on a drive by opinion. Maybe the bank has a full appraisal done by a licensed professional that is over six months old but that was thorough. And they want Joe or Josephine Broker to take a quick peek outside and report back if the place is empty, any junk cars in the yard or obvious safety or environmental concerns? But to add an update from a drive by broker that may never have been into the place and to come up with a value to take to the bank is a whole can of worms. What if the place has frozen up due to lack of heat last winter? What is water from the freeze up ran and ran before icing up and the excess water around the foundation caused it to heave and crack? You don't see that unless you have xray vision as you walk around the outside of the home. Sometimes a broker is told don't go near the owner, and a foreclosure is underway that is not friendly. Again, when asked what the place is worth, ball park, it is based on what you can see...and that is not much if just the front and sides of the place are visible and you are told don't get out of the car for further investigation.  I have had a home where the outside of the place needs paint or siding and lots of repair but due to the time of year, the current owner is not able to tackle the outside of the place due to winter, etc. But on the inside, what a different picture where the place has a new kitchen, bath, flooring and ceilings.  You can't judge a book from its cover thinking comes into play in this case. It can go the other way and the best way to know the fair market value is a licensed appraiser doing a full blown in debt study of the place, walking thru every room, seeing the attic and cellar. Many times a broker or appraiser have been in the place earlier and have a history with the real maine real estate broker, andrew mooers realtor,mooers realtyestate.  But if that was ten years ago, alot can happen that a tour of the inside now would change the memory recollection of what the condition  was a decade ago. The broker price opinion without full tour and inspection may be part of the problem with exotic lending and fly by night mortgage operations that were plentiful during the hay day of the latest real estate market escalation. Why does it happen? The cost of a full appraisal may be $300+. The drive by with a new agent anxious to get gas money is whatever they can whittle the compensation down to...how about $25? YIKES!

Maine REALTOR Andrew Mooers - Maine Real Estate Broker & Office Owner

info@mooersrealty.com | 207.532.6573

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Comment balloon 6 commentsAndrew Mooers | 207.532.6573 • October 02 2008 08:29AM

Comments

Banks price properties by BPO, which is merely a sign of things to come if someone makes an offer on one. 

Banks do not know how to sell real estate. 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 10 years ago

I know that many lending institutions (mine included) only use a BPO as a secondary opinion to a full URAR. If the clients disagree with the broker's opinion of value a full second appraisal from an independent appraiser can be provided. We use BPO's as a way to make us comfortable on values in areas that we are not directly familiar with. If the URAR looks suspect or raises questions a BPO is a MUCH less expensive option for the borrower.

Anyone wholely basing their opinion of value on a BPO is probably going to get some nasty surprises.

Posted by Beth Forbes, Your 24/7 loan officer (The mortgage help you want when you need it.) over 10 years ago

Beth..you are so right. But they do have a place as a low cost way to let a lender where the loan is tittering and non performing to know if the place is empty, vandalized, etc and to establish a local set of eyes to quickly, cheaply serve that purpose to report back what they see. Maybe also to if it is empty report the front door is wide open, etc. and to help get it secured for round two of the foreclosure.

Lenn...back up purpose may have been the original intent..now as consumers complain of costs and banks compete head to head for loans, its like getting a nurse to perform the surgeons job all for the sake of saving money, lowering closing costs! I remember when there was no appraisal licensing platform in Maine and any agent that had their license and was breathing could give the value estimate and the days when the banker came out and did the appraisal too!

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) over 10 years ago

I hate doing BPOs..... 

 

Posted by Maureen McCabe, Columbus Ohio Real Estate (HER Realtors) over 10 years ago

Hi Andrew, I have done some BPOs and I am only guessing what the interiors of these houses look like.  I have to think that they are in average condition and hope for the best.

Posted by Jen Bowman, Realtor - Anna Maria Island & Bradenton FL (Keller Williams on the Water) over 10 years ago

Jen...what if Stephen King made a movie in there...but it looks mild mannered, Clark Kent like on the outside?  I know that the run down condition of the outside usually means more of the same deferred maintenance or abuse inside...usually.  But heating systems and plumbing freeze up and damage when you live in Northeast a big problem to repair.  Especially hot water heated systems and a second floor if it "rained and rained
 thru the ceiling, ruining floors in the process and sat their thru a foreclosure. If the place is empty you can look thru windows which help, but if it is a home being lived in, and you have orders not to talk to anyone, not to get out of the car and to just rely on town records...YIKES!

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) over 10 years ago

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