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Linnea M. Ba…, Real Estate Pro in Marlborough, MA

Agents - Question regarding adjustments in BPO comps...

Asked by Linnea M. Bates, Marlborough, MA Fri Oct 10, 2008

Ok, guys...I'm stuck! Do BPO's for a couple companies, but doing my first for ClearCapital. What a nightmare. This is for a REO property that has been TRASHED! Seriously, like, $250k-$300k depreciation due to damages. The market is a VERY tight market, even now (approx. 11 houses sold in the entire town in the past year!!!) Pulled up the closest comps I could find, but not even close to being "apples to apples" due to condition of subject property. I submitted the BPO, and they now want price adjustments for everything that is different about the comp properties (ie, garage, extra bedroom, etc.). Does anyone know of a place I can go online to learn the "standard" adjustment for such things? Some kind of list or something? Most of my BPO's from the past are very comparable indeed, therefore adjustments weren't necessary. I feel stupid even putting this out here...I'm no newbie, and I should know this! Any help you all can offer is most appreciated. I'm in Massachusetts...

Help the community by answering this question:


Hello Linnea,

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.
Web Reference:
3 votes Thank Flag Link Wed Sep 15, 2010
Some times a BPO is not the appropriate valuation tool for a piece of real estate. It's not a knock on anyone's skill level personally, it just not may be the right way for the owner to value that asset. The company ClearCapital should know this and approach a different valuation venue. Although this is geared towards a homeowner, even a asset management company, amc, lender or investor should read this:… It's my opinion on the exact situation facing the OP. I bet that Linnea did a lot of research, and consulted with a bunch of professional to get the job done correctly. Professionals always persevere.
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1 vote Thank Flag Link Fri May 6, 2011
Sorry, but I have a big problem with the majority of the answers, here, coming as they are mostly from "play appraisers"...unlicensed people who may be failed real estate agents, or failed residential mortgage brokers, or who new laws shut out of doing mortgage mods or TILA audits. Doing BPO's is the latest opportunity for people to jump into, often without training and always without the requirement for licensing.

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 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 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 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.
1 vote Thank Flag Link Fri May 6, 2011

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.
1 vote Thank Flag Link Fri Sep 17, 2010
I work with Clear Capital too. Send me your email address and I'll send you my list that I use as a rule of thumb when I need to make major adjustments. Michelle
1 vote Thank Flag Link Sat Oct 11, 2008
hi Michelle - Please send me your list of adjustment. Here is my email address: I appreciate it. Thank you - Ray
Flag Sat May 17, 2014
Hi Michelle, Please send me your list of adjustments, my e-mail is Thanks, Janet Weatherford-Baker
Flag Thu May 30, 2013
BPO is an idea killing the sellers,lenders and both listing and selling agents in SS deals. If you would like to understand why, at least you have to know the difference between value and price.

0 votes Thank Flag Link Sun May 8, 2011
Mimi's advice below is very good, Clear Capital's standards are on their website and you can download them. I am not sure how the BPO turned out but there's always a way to get your value, sometimes it takes more work than other times.

Rob Henry
BPO/REO blog
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0 votes Thank Flag Link Sun Jun 27, 2010
Clear Capital provides "Standard and Guidelines" manual for thier vendors. It's on the website. Alot of basic Real estate knowledge is very useful as well. I have a G.R.I. and started doing BPO's before that . I know I am much better now. There are also training modules on the website. Who do you do BPO's for that does not require adjustments for dis-similar features? I want some of that easy money!
0 votes Thank Flag Link Sun Oct 11, 2009
To Linnea and all the real estate professional persons,

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.


0 votes Thank Flag Link Tue Mar 17, 2009
Suggest you go to a REOS designation course for this valuable information. Also NRBA's REO Bootcamp is an excellent forum
0 votes Thank Flag Link Tue Mar 17, 2009
My first BPO was for Clear Capital also, and it can be a little stressful.

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!
0 votes Thank Flag Link Sun Dec 7, 2008
Linnea, could you possibly share the cheet sheet you got for the adjustments? I work for clear capital too sometimes and would love that little adjustment sheet for garages etc.. My email is
Thanks in advance. It would be a Godsend!!
0 votes Thank Flag Link Sat Dec 6, 2008
Thanks, Paulette! I actually find the "cheat sheet" that one of our fellow MA Realtors sent me to be a Godsend! It will definitely help with keeping my adjustments uniform, and makes coming up with the adjustments in the first place a breeze!

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!

Thanks again!
0 votes Thank Flag Link Thu Nov 6, 2008
Hi Linnea,

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.

Paulette Armstrong
0 votes Thank Flag Link Wed Nov 5, 2008
An appraiser could help you estimate the "cost to cure" and adjustments but if the home is not in livable condition you'll have a hard time getting financing for your buyer. Rehab loans are available but take a bit of time planning them.

0 votes Thank Flag Link Fri Oct 31, 2008
Hi Linnea. I can see you have a special situation here and sometimes you won't be able to find a true comparable listing or sale. Unfortunately, there's not a list for adjustments as adjustments vary from location to location. If the house is trashed, you have to use your best judgment and estimate the cost of the repairs. I would include a disclaimer that you are not a contractor and that you recommend having licensed contractors prepare estimates for the work that needs to be done to bring the property to at least average condition. I'd also state that your estimate is very conservative and that it may very well take more money to make necessary repairs due to unknown defects. You can also call CC and ask to speak to someone in quality control. I have done that a few times for the tough ones. They have always been very helpful and understanding.

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.
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0 votes Thank Flag Link Sat Oct 11, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
I dont know of any site that breaks down a certain percentage or amount. I try to use estimates of what it would cost to build, add or repair the item. For instance break it down as repair sheetrock, interior painting, remove flooring and replace flooring, install new heating system , replace all windows. replace roof. replace cabonets and then put an amount to each. Then you want to put a value on such utems as no garage vs 2 car garage $24,000 or 1 car to 2 car $10,000, finished basement vs not finished etc. then deduct the repair amount and the difference of other items from the average price of the comps. use the repair section to itemize or do it in the description. hope this helps
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0 votes Thank Flag Link Sat Oct 11, 2008
Thank you all so much for your help and your insights! I felt foolish even posting this question here, but I feel less so now. I am NOT an appraiser...I'm a Realtor! I do my best with the comps available, but I don't know off the top of my head how much it adds or takes away from a comp to have, say, an extra bedroom or a finished basement. I tend to look at the big picture when doing a CMA, and am generally pretty spot-on (until I have to argue with my sellers that their $250k home is NOT actually a palatial mansion!!!), but this is a bit more in depth than I've been asked to go before for a BPO. Thank you all again...I really appreciate all the input!
0 votes Thank Flag Link Sat Oct 11, 2008
Hi Linnea,
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.
0 votes Thank Flag Link Sat Oct 11, 2008
Hi Linnea:

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 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!
0 votes Thank Flag Link Sat Oct 11, 2008

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.
0 votes Thank Flag Link Sat Oct 11, 2008
I do not know of any sight that covers this. Try to treat this as if you were preparing a CMA and try to remove yourself from the condition. This should provide the difference for beds/garages/etc. You may need to use the information you have for sold homes that are not comparable to the subject to identify what a garage adds to the value. Kind of like doing a few other CMA's to learn the price adjustments for your area. You may find that a garage adds $25K to the value locally and be able to store this info for future use.

Again, try to put condition out of your mind until the other numbers are calculated.
0 votes Thank Flag Link Sat Oct 11, 2008
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