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 estate. 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!
This blog does not allow anonymous comments