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Marvin Von Renchler's Blog

By Marvin Von Renchler | Managing Broker in Tigard, OR

Even more BPO horror stories.

Ive been doing BPOS for almost 3 years now. Im talking EVERY DAY. I could be a blind taxi driver in this city. Ive posted several blogs about why many BPOs are not valid, how and why lenders manipulate data/values, and why mnany BPO agens shouldnt be allowed to have license. Harsh sounding , but lets take our heads out of the sand.

Here are a few more examples of some recent orders:

1. No previous MLS info Only had TAX info. It said 2,700 square foot ONE bedroom, multi level. After doing some personal reseach I discoverd that it was a 4 bedroom and that it had three ove those 'below grade'.  Not a basement or daylight basement---the home was built on a sloping lot and had three true levels with exits. I reported this to the company and I was told to only comp the main level GLA (Gross Living Area) and as a one bedrrom. Where in the heck would I find 2700 sqft 1 bedroom homes?  Had to set up a search using sq ft per level instead of total. This gave me some ranch styles and some basement homes with about the same above grade, but they were NOT really comps for the subject, and they were out as far as 5 miles away. That was fine with the lender. Oddly, it produced a value far below the true value, and most of the time the lenders are pushing for the highest value possible. I still dont know why they wanted it that way.

2. An old Portland home with the strangest building method Ive ever seen. It had all seven foot ceilings on the main level. A very odd hidden stairway up to two rooms with 5'11" ceilings and no closets. Looking up from the front yard, I couldnt ell if it was a true upper levelor just dormers in an attic because of its short exterior walls. Turns out it was built that way for some unknown reason---almost as though it had to be UNDER something above it. The lower ceilings were 7 feet because the upper floor was built down into the lower level but not across normal strong joists. Only God knws why the upper ceilings were 5'11". The upper floor was actually falling into the lower level and the roof was bowed like a saddle! Looked like a giant hand just squashed the thing down into its self. Had a full basement in good condition.  The property had 4 prior recent BPOS from $236,000 to $269,000 with NO Repairs mentioned!!! I I COULDNT BELIEVE IT. The thing needed to either be demolished of the entire lower ceiling plue upper story be rebuilt. At rhe very least the upper needed to be expanded up to 7 or 8 feet tall. Im 6'2" and couldnt walk upthere. Oh---the priors had all called it a three bedroom and comped it that way. The lender, of course, thought it worth $269,000.  I gave it a value of $135,000 as is and estimated a conservative $70,000 to tear it to the lower walls and start over.

Lender asked my to justify why the priors were up to $269,000 and I answered "Because the agents shouldnt have licenses." I actually did. My photos included the bowed roof and substandard celings and I asked the lenders rep why the other BPOs had not. They accepted my value but Im betting no one will ever see it. The lenders use whichever one best fits their need.

Ive posted before that real estate agents will call and ask me why I didnt do a BPO. I tell them that not only was it finished, I have the check to prove they paid me for it. How interesting that the lenders were trying to use priors with higher values. On a positive note, I like doing business for Freddie controlled houses. The people know whats going on and are in the real world.

Fraud. Oh my my. Got an order to do ahouse in the east side.It had a 7 year old loan on it from a local bank. BPO company sent me a portion (they never give the entire thing) of the original appraisal. The picture showed just the house and it had a car in front plus shutters closed on the windows. I arrived to find it 100 feet from a Shell gas station. It was a nail salon! Pure commercial. Zoned MUE or mixed use commercial/residential.  I asked the station manager how long he had been there and he told me ten years. I asked how long the little place had been a nail salon and he told me only about 4 years but it had always had one small business or another in it the entire ten he was there.

What does this tell you? APPRAISAL FRAUD  for one. Small local bank loan officer fraud for another.

My experience shows that most of these BPO'd properties are being valued too high. This is because BPO agents dont care. They think 50 bucks shouldnt buy professional service. They want to get it into the system and go on as fast as possible.Part of this mentality comes from being GRADED for speed by the ordering companies. The clock starts running as soon as you accept the order.This make it hard if an order comes in at 9 PM on a Fri evening and you have 72 hours to complete it. By the time you go in on Sat and check emails, you have lost a lot of time. Its about 45 minutes on average to complete a BPO on the computer. This doesnt include driving time. Portland traffic is so terribly congested that an order only 7 to 10 miles from me can sometimes take almost 2 hours if I have to crawl through I 205 or over the bridges for a north property.Some agent take only very close properties in certain areas with cloned houses, so their end of month score is high. They get a big write up in the BPO companies newsletter for being in the top percent but it really means nothing.

Almost all my orders are now for short sales. Many are emergency status and the lenders want fast answers. This tells me lenders are now a little more willing to dump inventory and that more short sale offers are being written.

Though actual MLS stats could be very different, my collection of data shows that most short sale listings sell for about 8% less than asking. Of course some sell for more---my figures are general. Id like to see MLS stats on it. You do realize that the majority of activity is SHORT/REO. These properties are usually markets at about true value at the time. They sell for 8% less and it drpos values of the next batch. ame thing ahppens and its drops the next batch, etc. This wont go on forever because we reach a certain point where the real estate is a great value and people start to bid even or overbid. I see that now in spotty areas. This is especially evident in areas where smaller homes dropped value as RENTS went up. At a certain cross on the graph, ROI causes investors to start over bidding each other for trhe good cash flow rentals.

I am certain that, despite the SPIN of the government and media, we have more drop in the market in general and will have enough short and reo activity to keep things down or flat for at least two or three more years.

Next time Ill tell you whats been done to me by home owners, including having paint thown on my windows so I could not take pictures through the glass.

Comments

By Scott Miller - REALTOR®,  Thu Sep 27 2012, 13:23
More reasons that I won't touch BPOs, and I wrote about it a LONG time ago, too. I just think the banks are still the MAIN culprits driving the massive fraud in the RE market nationally. No doubt in my mind.

GOOD LUCK.
By Michelle Scolaro,  Thu Sep 27 2012, 18:36
Have you heard of Banker REO, LLC out of Illinois? They claim they work as Asset Management Co for small to medium sized banks and credit unions and attempted to get me to pay a "small refundable insurance policy" of $349 to sign up for BPO orders and also promised listings on those BPOs. Of course they could not offer references and admitted they have complaints on BBB but that they are from agents who did subpar BPO work for them. Been in business for about 18 months.
By Bob Costello,  Fri Sep 28 2012, 11:46
Bankers REO is not real - just a money collection website.
I agree that there is still a lot of fraud out there.
By Marvin Von Renchler,  Fri Sep 28 2012, 12:08
Dont ever pay money to be on a site. Most claim to be THE place where lenders go to look for area agents. Lenders do NOT do that. They rely on portals such as FARVV, Marktomarket, etc to do the placement.
By Annette Lawrence 727.420.4041,  Sun May 4 2014, 05:59
Just yesterday, May 3, 2014, here on Trulia was a promotion for $8 exterior BPO's.
This is what happens when agents get sucked into a 'lowest bid' for a BPO environment.
Hey, if you need to make a few bucks squeezing a mouse on Google Maps, and the banks are willing to pay....well, that is a option.

Now, if you been in the business any length of time, you know what BPO's are about. That does mean you just might need to apply your skills to achieve the outcome your client wants.

$8 BPO's. As Marvin pointed out, even that is too high for the result some BPO's deliver.
By Christopher Crosby,  Tue May 6 2014, 05:54
Wow - so many horror stories. The system needs a major overhaul.
By Marvin Von Renchler,  Tue May 6 2014, 09:28
It certainly does need an overhaul but so does our horribly corrupt banking system backed by a horribly corrupt government. If the admisistration didnt back the banks in so many ways right now, they banks wouldnt be able to thumb their noses at consumers, lie to them about the loan modification process then steal their homes. Yes, yes, people knew that they were siging up for a debt and that debts have to be paid but many times the banks pulled a scam to take the homes. Ive encountered MANY people who were not in trouble with their loans. They simply asked to have an ARM changed to a fixed, etc. They were told by their lenders that they had to be 2 months behind to get a loan mod, so they let two payments go then started a fiasco of a process of lender lies until they owed so much back due including outrageous fees that they couldnt recover, and they now had bad credit. The lenders wantted to foreclose. They STILL want to foreclose. They dont want to loan mod.Ive been trying to tell the whole story to a local TV reporter but they wont listen.

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