We cover this exact topic in our class/coaching at the website listed below. There are several easy ways to find out exact adjustments in any market area, and these ways have been approved by several BPO companies, not just one. We do thousands of BPOs a year and our quality is second to none. If you are high on quality, you are high on the preference of the company.
Clear Capital can be a stresser, especially when they ask for an adjustment based on the fact that the subject is a non neutral paint color. Great, so do they want the cost of paint, the cost of having it painted, what the new value will be once it's painted? It's fun, but there are ways to navigate through even the most annoying issues these companies will throw at you.
I applaud those who take course in this...but, who are your instructors? Other non-licensed ex-realty brokers whose CMA's were laughed at by any genuine appraiser? The second biggest bogus opportunity, next to doing BPO's for a fee...is to start teaching others to do them, without the instructor having any formal appraisal training. Sorry, but, in the end, if you have not commited yourself to taking the same training that appraisers take, your CMA's and BPO's are just layman's opinions and suspect.
The truth is that, while there are general, even national, limits as to how large an individual adjustment will be acceptable (say, up to 10% for number of bedrooms), and how large the total of all adjustents can be (perhaps 25-35%). The actual adjustments are market driven. The amount of adjustment that should be made for any amenity or property characteristic is almost a local custom. And, any smart appraiser, who has trained in his profession, knows that much of the adjusting process...at least as far as specific adjustments for specific amenities, can't be learned from a book or a national instructor...other than costing figures from regional books.
My point is that, if someone on this site, from Perrineville, NJ (where I hailed from) thinks they can advise someone in Malibu, CA as to the standard adjustments they use...then one or both of you is nuts! Yes, there are some standard mathematical techniques for deriving the size of certain adjustments that are appropriate. But, even if the math is standard, the adjustments will vary for different locations.
In conclusion, if a bogus expert tries to share their list of standard adjustments with you...run in the other direction. You are not, by any means, talking to a professional who is capable of producing any estimate of value that should be trusted.
By the way...I am a former appraiser and real estate broker, an instructor in commercial underwriting, processing, and compliance, a commercial mortgage broker. I am also not saying that every appraiser is a professional worthy of praise. There are slugs and slaggards in every profession. But, at least their appraisal methods are generally standard, when that is appropriate, and they tend to realize when it is not possible to derive accurate estimates of value unless you do NOT attempt to use standard figures but, rather, let the local market provide the answers.
There are no such thing as standard adjustments as each market yields different values. BPOs want like condition comps with like amenities in like neighborhoods to minimize adjustments. Also, adjustments need to be the same across the board.
Example: if a garage is worth $10k, all adjustments (+/-) need to be $10k. Also, another adjustment rule is that the BPO companies don't like any 1 adjustment being more than 10% of the final value.
Hope that helped.
As most of the CMAs and Appraisal reports consumers and lenders received before, BPO become another formal advice provided by many of the professional persons. Nobody wants to see the result as the same as that the lenders had with the appraisal reports or that the buyers had with the CMAs before.
BPO should be easier than CMA technicially if you CAM standard is based on your fiduciary duty as a person with professinal skills.
Here is what I have discovered, if you call the number on the "Claification Email" that they send you and clearly communicate with the Rep assigned to your property, it will help a lot. Usually they will tell you everything you need to know and more about what they need you to do. Sometimes I get a BPO done very easily and other times it feels like brains surgery. I have noticed they get easier every time I do them! Good luck!
Thanks in advance. It would be a Godsend!!
As far as needing an agent in the cape...where were you 2 years ago??? I had 3 people I was working with, either moving into or out of your area...I didn't know anyone around there, so had to blindly refer out! I will definitely keep you handy should I come into any others looking to move into/out of your area!
I also do BPO's for Clear Capital and am from MA. Sometimes they are more of a hassle than they are worth. I make a guesstimate for the adjustments. They don't have to be exact. As long you use the same adjustment for a 1 car attached garage, let's say, on one comp as you do on another.
Good Luck. If you ever need an agent on Cape Cod or the South Shore feel free to email me.
As far as adjustments for different bedroom count and garage size are concerned, that has really nothing to do with the property condition. An extra bedroom may not be as important when you compare a 3 bedroom to a 4 bedroom property as opposed to a 2-bedroom to a 3-bedroom. In my market, I would try very hard to find only comps that have at least as many bedrooms as the subject property. As far as the size of the garage is concerned, I would find a comparable sale with a garage same size as the subject and another with a garage that's larger (e.g., 2-car and 3 car garage). Make adjustments for everything else (i.e., age, GLA, lot size) and then look at how the difference in garage size affects the value. That gives you a pretty good idea of the value of the larger or smaller garage. It's a little bit different when you have a house with a garage and another without a garage at all as not having a garage at all affects the value of a property more than what an extra space in the garage will add in value (at least that's true in my market) . I'd try not to use a property that does not have a garage at all, but when you only have 11 properties that sold in that particular neighborhood, you may have to expand your search geographically. Some of these BPOs can get pretty time consuming but you just have to do a few of them to maintain your relationship with CC.
Some properties are not really suitable for valuation by BPO and you can only do the best possible job and include disclaimers. I had one earlier this year with severe fire damage. Needless to say, I could not find another property in the same neighborhood that was similar in condition I have no idea why they bothered having a BPO as I thought it was a case for an insurance adjuster, but I still had to get it done. I know I spoke to someone in quality control to get guidance. Don't be shy. Asking questions is not a bad thing. Nobody knows everything.
Good luck with this BPO.
Remember the "O" stands for Opinion. If this is your true opinion and you have provided them with the best comps available then you have done your job. If they want adjustments then they should fork over the 300-500 to get an appraisal done. Some things aren't worth $50-$85. Best of Luck.
I'll try to help. First of all, shame on all the mortgage companies who only want to pay for a BPO but expect a full blown appraisal. I don't know what Clear Capital pays for a BPO, but in NJ most of our BPO prices are around $50.00 as opposed to $350 for an appraisal on a distressed property.
Having been a state certified residential real estate appraiser for many, many years prior to selling real estate, I can tell you that there really isn't (and shouldn't be) a standard "list" of adjustments. Adjustments come from paired sales in your area. For example....two homes that sold around the same time, with the only difference being a garage. The difference in sales price would be attributed to the garage. Same thing for two similar homes sold around the same time...one with a brand new kitchen, the other with a dated kitchen. The difference in sales price would be attributed to the new kitchen.
Hope that helps!
I know what you mean. I've had a few with that company and they always want very detailed information and it can get very frustrating. I had one bpo that was very similar to what you are going through. I started by trying to come up with a number for the house if it was fixed up and in good shape, then work backwards. Look at the house as a buyer. What would you pay for it? If you have any friends in the construction business, ask them about how much it would cost for certain things to be done.
Again, try to put condition out of your mind until the other numbers are calculated.