Candace Larson is an active agent and real estate teacher in Arizona, author of the forthcoming book (tentatively titled “Let’s Talk BPOs”) and one of the leading experts on the topic of Broker Price Opinions in America. Larson suggests that there is a general lack of knowledge on this topic amongst real estate professionals that is resulting in less deals being made.
For consumers not familiar with Broker Price Opinions (BPOs), Larson elaborates, “Basically a BPO is the same thing as an Appraisal – except it costs $200-$300 less for each report. She adds, “Technically speaking, a BPO is a ‘method that a Real Estate Broker (or an agent acting on behalf of their employing broker) uses to estimate the probable selling price of a Real Estate property/house’ (NABPOP, 2009)’. She goes on to emphasize, “These reports have more value over appraisals because most Lenders are ordering multiple reports on the same subject property monthly.”
This is a complicated issue because any licensed real estate person can conduct a BPO without any specific certification or training. Larson addresses this issue, “Scary right? Not all agents should be conducting these reports, and not all agents take these reports seriously. I am hoping to change that.”
Larson summarizes the problem that this lack of education is causing, “Homes are either not appraising for asking price, or they are appraising for values way over the asking price. In short, agents do not know how to properly set the listing price because they don’t understand the rules.”
Larson explains, “They are either setting them way too high and then the deal falls through or they (the agents) must take a commission cut because the seller doesn’t have enough equity to cover all the fees.” She continues, “Or, buyers are walking into homes with immediate equity because once again, the agent didn’t know how to properly set the asking price. This is a vicious cycle that needs to be addressed.”
While this does sound a little negative there is definitely a positive side as well. Realtors skilled at the art and science of Broker Price Opinions can provide estimates that land within the Appraiser’s values and according to Larson, this in-turn will get more deals closed. “My goal is not to reveal the secrets of Appraisers,” states Larson. “Instead, I intend to open up a world of new habits related to doing BPOs properly. Habits that will better serve the consumer and simultaneously facilitate the success of real estate professionals.”
Bold claims to be sure, but Larson definitely has the credentials to back up such claims. She is consistently contacted directly by banks when they come across “hard-to-comp” properties in her area and her book on the topic is due to come out in early 2015.
When asked what other agents should know about BPOs that they might not know already, Larson replied, “The BPO value system is not just for the banks. This is a value system that will allow Realtors throughout the nation to understand how appraisals are conducted and applied to our daily contracts.”
Finally, in closing this subject, Larson drops this golden nugget, “The main secret to appraisal values in today’s market is the search area. Banks are now wanting all comparables to be within a half-mile from the subject property.” She continues, “In order to go outside of that perimeter one must understand all of the rules of comparison and can legally justify why the search area was expanded outside of a half mile.”
There are a number of other very pertinent details that Realtors should be aware of, but it is recommended that they pick up a copy of Candace Larson’s book or contact her directly to get all the facts. She can be reached at yourbpoexpert@gmail.com or through her site: http://www.mapphx.com/about/profile/1581692/.