Michael Kornitzer
Sniper Real Estate, Broker
9280 Bay Plaza Blvd. Suite 716
Tampa Florida 33619

December 18, 2010
813-246-4000    
mikek@sniperrealty.com

 The BPO (Broker Price Opinion) is the latest scam in this nationwide real estate travesty.  It is a complete misnomer and used in most cases illegally/incorrectly.  Over the years,  I have been contacted thousands of times by people wanting to do BPO’s on my clients properties.  I cannot remember one of them identifying themselves as a “Broker”.  Yet nationwide the value of real estate is largely being determined by $45. BPO’s.   Hundreds of millions of dollars worth of mortgage will be bought, sold, traded or released this month based on a $45 appraisal (BPO).  An appraisal that was done by a licensed sales person, NOT a licensed appraiser or inspector.

In most cases,  the BPO is used by lenders, investors and insurance companies in place of an actual appraisal.  The banking industry is taking advantage of a slow real estate market and using real estate licensees to do appraisals for a fraction of the cost.  Full blown appraisals can cost upwards of $450. where BPO’s pay as little as $25.

In the past week, I have been contacted by the following “Sales Associate” state licensees to do BPO’s on my clients properties:

1)Becky who was licensed in real estate less than a month ago

2) Martha who identified herself as an “inspector”

3) Chris who identified himself as an “appraiser”

None of which was a licensed “Broker” and only one who identified the Real Estate Brokerage they were with.  Recently, I have started to take a different approach with these people.  I grill them hard before I let them in a client’s house.  I ask them about their experience, knowledge of the subject property and neighborhood and if they have preliminary comparables yet.  Then I bring up particulars about the specific house they are calling about. 

Martha called to do a BPO on a house with mold and no HVAC system.  I asked if she was a licensed inspector and if she knew  “how to make adjustments for mold and no HVAC based on USPAP” (Uniform Standards of Professional Appraisal Practice).  She answered that “she had no idea what USPAP was and that she was not allowed to discuss the house with anyone.”

Here in Florida, Real Estate Licensees are empowered to do appraisals for money in some circumstances.  They must however follow USPAP guidelines.  So when a BPO agent does not even know what USPAP is, I deny them access to the property.  It seems unlikely that their “Broker Price Opinion” could be accurate in assigning current marketability or market rate.

Real Estate Sales Associates should practice and be familiar with CMA (Comparative Market Analysis).  As the name implies it is a “market analysis” based on published market data.  Minimal adjustments from one property to the next are used in the CMA.  Number of bedrooms is an easy adjustment in a market analysis because a similar property with 4 bedrooms has sold for XXX more than 3 bedrooms.  More advanced analysis should be done by licensed professionals in their field.  Many “distressed” properties in short sale and foreclosure do have deficiencies that might require specialized training and knowledge to evaluate.  This is precisely why there are license and training requirements for inspectors and appraisers. 

Have you ever heard of anyone applying  for a mortgage and the Lender ordering a BPO instead of an appraisal? 

It’s not that difficult!  Inspectors should inspect - Appraisers should appraise -  Sales people should sell!

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Michael G. Kornitzer Broker