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Opinion Editorials

The evolution of the Broker Price Opinion – harsh words on industry changes

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The evolution of broker price opinions

Broker Price Opinions- I spend a good portion of the working week completing quite a few of them, just as many other Realtors do. Even before the passage of the Dodd-Frank Act, BPOs could not be used for new, purchase, government backed loans. What they were used for (and are still used for) is dropping PMI, determining price (please note: price opinion – hence the name BPO, not value, appraisers determine value, as real estate agents determine price) for REO listings, short sales, refinance mortgages, bankruptcy, note sales, divorces, relos, sheriff or auction sales, for insurance companies, loan modifications, and even for estates.

While the forms will vary based on the company, a BPO usually contains information on a subject, the very local sub-market, as well as listing and sales comparables. Whether due to pressure from those in government or throughout different aspects of the real estate and banking industry, BPOs are becoming less than a highly detailed CMA and more an appraisal-esque report. Companies are also requiring more education, higher E&O insurance, if not outright asking to be added onto the policy itself, and lowering contracted fees as well.

Certification alphabet soup

Whacked out changes have occurred across the board from a number of different banks, and outsourcing companies in the last few years, none of them really seem to mesh with one another, or make a ton of sense other than maybe the education thing. Preferential assignment of BPOs may not be the preferred terminology to use, however there has been a push to attain additional education, actually, certification from any number of groups, be it NAR’s newly introduced BPO Certification, the certification offered by The National Association of Broker Price Opinion Professionals, online courses offered by other loss mitigation companies, or continuing ed classes from anyone else out there.   

On at least a few instances, there have been requests to up E&O policies from a million bucks (probably the industry norm) to three million. For BPOs, and even tossing in REOs into the mix, it just isn’t cost effective to raise the limit for some real estate companies; including the fact that more than one agent is working this niche. The expense doesn’t justify the payout

The new industry bidding war

One notable company implemented the requirement of actually being added onto E&O policies a couple of years ago. This same company has recently started a bidding war between Realtors in regards to fees. Instead of an order being broadcast out to Realtors in a given area at say, $50, and the first one to accept, gets it. Now, Realtors can bid down or up in $0.50 increments, lowering their fee by $7.00, or raising it by a whopping $2.00 from the base price. There’s nothing like whoring oneself out in the name of getting business, right? Not when many of these companies are tightening their search parameters – try finding comps for a somewhat normal house, let alone an obscure one, within a third of a mile when it’s an urban area, on mile when suburban, or three miles in a rural area… seriously. 

Additionally, some companies now require driving by all comps and original comp photos to boot. Another company wants Realtors to upload a copy of tax records as part of the order. Let’s not forget my favorite new requirement of all- a complete sales history not only of the subject, but of all the comparables to boot. We also enjoy the companies who charge us for using whatever jacked up flavor of the month online platform they are so inclined to use, none of which are exactly user friendly. The fees go from one to two percent to a flat fee of $5 or $10… per ORDER.

BPOs & appraisals- speaking up for the industry

Allow me one brief second to speak both for the masses, and to quote myself, dude, if I wanted to do appraisals, I would have gotten a freaking appraisal license.  In some messed up way, many of these things are knee-jerk reactions to an equally messed up housing industry, and yeah probably some (albeit relatively few) scheming, shmuck, agent-types were out there falsifying or influencing BPOs. Newsflash- this is why we have real estate licensing laws and means of punishment for not following them. The sins of the father should not be revisited upon the son.

Katie Cosner, occasionally known as Kathleen, or KT, is a Realtor® with Cutler Real Estate and is active in her local Board of Realtors® on the Equal Opportunity & Professional Development Committee. She has been floating around online for a number of years, and is on facebook as well as twitter. While Katie has a few hardcore beliefs, three in the Real Estate World to live and die by are; education, ethics, and the law - insert random quote from “A Few Good Men” here. Katie is also an avid Cleveland Indians fan, which really explains quite a bit of her… quirks.

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3 Comments

3 Comments

  1. CJ

    September 26, 2011 at 8:46 am

    Could not agree with you more. One thing you did not mention is the manipulation of the BPO's by some vendors. They will tell you which comps you can use and which comps you can not use, make you adjust brackets and final evaluations, and even reject a comp that is right next door for another in a completely different neighborhood. What ever happened to location, location, location? What I have also found in doing over 100 BPO's a month is that some pay in a timely fashion but others take upwards of 60 days and are living on Broker/Agent floats. They get paid in 2 weeks and get $150 for the BPO you are providing for $35. One company recently went out of business owing BPO providers hundreds of thousands of dollars. I have been doing BPO's for over 20 years and with all these recent new developments I will probably fall by the wayside and let the hungry newbies who are desperate to work for $5 an hour take my place. Even Mickey D's and Wally World pay benefits for minimum wage. Guess what the quality of this new BPO product will be worth? That's right you ALWAYS get what you pay for and a BPO will be worthless at the rate this is going.

    • Jonathan Benya

      September 27, 2011 at 5:03 pm

      I think BPO's are already pretty worthless. I hate having to fight valuations on short sales because a BPO agent did a shoddy job, but it seems to happen all the time. You're right about the payment problems, too. I don't even know how much I have outstanding on BPO's owed to me right now, I just gave up on doing them completely.

  2. Kathleen Cosner

    September 27, 2011 at 5:08 am

    Hey CJ-
    I have had a company suggest what they thought was a more appropriate comp that they found on Zillow or someplace, if I had to go out of normal search parameters. Once it was explained why their comp was not good, they backed down, but have not seen this lately at all.

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Opinion Editorials

The simplest ways to help an unhappy client

(EDITORIAL) We have all had to deal with an unhappy client or two, and maybe we couldn’t make it work, well here are some easy tips to help the next.

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unhappy client

Who here hasn’t had a client get aggravated for what seems like no good reason?

(Raise your hand!)

Who here hasn’t had that awkward “I hear what you’re saying, but…” conversation?

(More hands!)

Whether you’re providing marketing work, strategic planning services, graphic design ideas, or basic business advice, you’re going to run into the occasional client who Just. Is. Not. Here. For. It. And it can be so hard to help that unhappy client get back to a place where you can all come together to get the job done.

(Hands! Hands! Hands!)

Especially in this day and age of angry emoji reaction clicks, dealing with confrontational feedback can require a new level of diplomacy and tact. You’ve got an unhappy client who doesn’t have the ability to communicate their “why” to you, so instead, they go nuclear and your inbox is suddenly filled with the kind of unhappy vitriol you’re more used to seeing in your Facebook feed.

How do you handle it?

Because… you can actually handle it.

First and foremost, understand where the negative reaction is coming from. They’ve asked you for help with their cherished project. Maybe they wouldn’t be happy with anyone’s work. Maybe they can’t quite communicate what they want. Regardless of where the sticking point is, understand that the sticking point is (a) not your fault and (b) not going to be acknowledged by them.

So then, the second step… remove yourself from the criticism. Even if they make it personal, remove yourself from the situation. Look at it in terms of the work. The client wants X. You feel you have given them X, but they see it as Y. Can you see it from their perspective? Because if you can, you are way more than halfway there. Where are they coming from?

If this is an external review, on Google or such, just ignore it and move on. It’s done. You can’t argue it. But if it’s feedback you’re getting from a current client and your project is still in play… seriously, take a deep breath and give it a harder look. It might feel personal. But is it?

The best assumption to make is that there is something else going on. If you can keep your cool and work with your unhappy client to determine what’s making them uncomfortable, in a non-confrontational way, and to get them to an acceptable delivery — you’ve won. Because you’re continuing to provide them the service they’ve come to you for.

So take a look at the situation, and figure out the best response.

1. Is the argument clear?
Don’t waste your time trying to establish whether you’re right or they’re wrong. Instead, look at framing it in terms of what the client is trying to accomplish. Ask them to give you specific examples of what they hope to achieve. Allow them to tell you what they feel isn’t good… in fact, encourage them to tell you why they’re unhappy with what you’ve given them. All of this will help frame what they’re looking for and what you need to give them in round two.

2. Is their feedback relevant?
Well, yeah. There are times when you know that your client knows nothing. But they feel the need to demonstrate that They Know What They Are Doing.

Let them.

Just let them tell you, and let it go.

And… keep searching for that nugget of truth in what they’re saying. Their feedback may seem ridiculous. But what’s at the heart of it? Look for that. Look at this negative reaction as a signpost for what they’re truly after.

3. IS IT WORTH DEBATING?
This fits right in with number 2. They feel passionately that you need two spaces after every period. Is this something you really need to argue? CHOOSE. YOUR. BATTLES.

If your client really wants to engage on an issue … two spaces, or the use of a particular phrase … then let them say their piece. Then say your piece. But giving them room for an out. And once again, think about it from their perspective.

Maybe it’s someone who didn’t spend all their time in their first post-college job debating the niceties of the Oxford comma. Does it ultimately matter to the overall success of the project? If it does… go to the mat. Show them, with respect, why it’s important. But if it’s just a point of pride for you, the provider? Can you let it go?

I can’t sometimes. So I get it if you can’t. But still, it’s a good point to keep in mind. A good question to ask yourself, as a provider of a service. Which sword do you fall on… and why?

Clearly, you shouldn’t just roll over because a client has turned nasty. But neither should you turn every unhappy client response into your personal cause du jour. When you encounter negative, hostile client reactions, take a moment. Try to see it from their point of view. At the very least, the shift in perspective will help you handle their concerns. And at best, you’ll re-frame the discussion in a way that gives you both a handle on how to move forward.

You might learn from the exchange. Or maybe you’re just right, dammit. But you still have to think about what’s worth getting worked up over.

Finally, don’t let it bring you down. If it’s serious enough that you have to part ways over their reaction, help them do so amicably. Point them in the direction of someone you think might be able to accommodate their ideas. Stay positive for them, and for yourself. Then chalk it up to experience, and take the lessons on to the next client.

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Opinion Editorials

Facebook fights falsehoods (it’s a false flag)

(EDITORIAL) Facebook has chosen Reuters to monitor its site for false information, but what can one company really do, and why would Facebook only pick one?

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Reuters checks facebook

So Facebook has finally taken a step to making sure fake news doesn’t get spread on it’s platform. Like many a decision from them though, they haven’t been thorough with their venture.

I am a scientifically driven person, I want facts, figures, and evidence to determine what is reality. Technology is a double edged sword in this arena; sure having a camera on every device any person can hold makes it easy to film events, but deepfakes have made even video more questionable.

Many social media platforms have tried to ban deepfakes but others have actually encouraged it. “I’ll believe it when I see it” was the rally cry for the skeptical, but now it doesn’t mean anything. Altering video in realistic ways has destroyed the credibility of the medium, we have to question even what we see with our eyes.

The expansion of the internet has created a tighter communication net for all of humanity to share, but when specific groups want to sway everyone else there isn’t a lot stopping them if they shout louder than the rest.

With the use of bots, and knowing the specifics of a group you want to sway, it’s easy to spread a lie as truth. Considering how much information is known about almost any user on any social media platform, it’s easy to pick targets that don’t question what they see online.

Facebook has been the worst offender in knowing consumer data and what they do with that data. Even if you never post anything political, they know what your affiliation is. If you want to delete that information, it’s hidden in advertising customization.

Part of me is thrilled that Facebook has decided to try and stand against this spread of misinformation, but how they pursued this goal is anything but complete and foolproof.

Reuters is the news organization that Facebook has chosen to fact check the massive amount of posts, photos, and videos that show up on their platform everyday. It makes sense to grab a news organization to verify facts compared to “alternative facts”.

A big problem I have with this is that Reuters is a company, companies exist to make money. Lies sell better than truths. Ask 2007 banks how well lies sell, ask Enron how that business plan worked out, ask the actors from Game of Thrones about that last season.

Since Reuters is a company, some other bigger company could come along, buy them, and change everything, or put in people who let things slide. Even Captain America recognizes this process. “It’s run by people with agendas, and agendas change.” This could either begin pushing falsehoods into Facebook, or destroy Reuters credibility, and bite Facebook in the ass.

If some large group wants to spread misinformation, but can’t do it themselves, why wouldn’t they go after the number one place that people share information?

I really question if Reuters can handle the amount of information flowing through Facebook, remember almost a 3rd of the whole world uses Facebook. 2.45 Billion people will be checked by 25,800 employees at Reuters? I can appreciate their effort, but they will fail.

Why did Facebook only tag one company to handle this monumental task? If you know that many people are using your platform, and such a limited number of people work for the company you tasked with guarding the users, why wouldn’t you tag a dozen companies to tackle that nigh insurmountable number of users?

I think it’s because Facebook just needs that first headline “Facebook fights falsehoods”. That one line gets spread around but the rest of the story is ignored, or not thought about at all. If there is anything Facebook has learned about the spread of fake information on their platform, it’s how to spread it better.

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Opinion Editorials

Will shopping for that luxury item actually lower your quality of life?

(EDITORIAL) Want to buy yourself a pick-me-up? Have you thought of all the ramifications of that purchase? Try to avoid splurging on it.

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shopping bags

In an era of “treat-yo-self,” the urge to splurge is real. It doesn’t help that shopping – or what ends up being closer to impulse shopping – provides us with a hit of dopamine and a fleeting sense of control. Whether your life feels like it’s going downhill or you’ve just had a bad day, buying something you want (or think you want) can seem like an easy fix.

Unfortunately, it might not be so great when it comes to long-term happiness.

As you might have already guessed, purchasing new goods doesn’t fall in line with the minimalism trend that’s been sweeping the globe. Being saddled with a bunch of stuff you don’t need (and don’t even like!) is sure to make your mood dip, especially if the clutter makes it harder to concentrate. Plus, if you’ve got a real spending problem, the ache in your wallet is sure to manifest.

If that seems depressing, I’ve got even more bad news. Researchers at Harvard and Boston College have found yet another way spending can make us more unhappy in the long run: imposter syndrome. It’s that feeling you get when it seems like you’re not as good as your peers and they just haven’t caught on yet. This insecurity often arises in competitive careers, academics and, apparently, shopping.

Now, there’s one big caveat to this idea that purchasing goods will make you feel inferior: it really only applies to luxury goods. I’m talking about things like a Louis Vuitton purse, a top of the line Mercedes Benz, a cast iron skillet from Williams Sonoma (or is that one just me?). The point is, the study found that about 67% of people – regardless of their income – believed their purchase was inauthentic to their “true self.”

And this imposter syndrome even existed when the luxury items were bought on sale.

Does this mean you should avoid making a nice purchase you’ve been saving up for? Not necessarily. One researcher at Cambridge found that people were more likely to report happiness for purchases that fit their personalities. Basically, a die-hard golfer is going to enjoy a new club more than someone who bought the same golf club to try to keep up with their co-workers.

Moral of the story: maybe don’t impulse buy a fancy new Apple watch. Waiting to see if it’s something you really want can save your budget…and your overall happiness.

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