BPOs Are Becoming an Exacting Science

The housing industry relies on about 10 million broker price opinions (BPOs) each year, according to Franklin E. Rodebaugh, principal broker and president of American Wholesale Properties, Inc.
[IMAGE] ""BPOs are not going to go away,"" Rodebaugh said during a panel discussion on BPOs at the Five Star Default Servicing Conference and Expo this week.

He added that BPOs are ""becoming a far more exacting science than they've ever been before.""

""The industry is extremely reliant on BPOs,"" said Brad Froelich of RES.NET, also a speaker on the panel.

""If you think you've seen a lot of changes in the last 10 years, be prepared. You're going to see a lot more,"" he added.

""In short, expect to see UAD on all your BPOs here in the next year,"" he said.

UAD, or Uniform Appraisal Dataset, is a standard grading system for valuing properties. The UAD is already a re-

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quirement for any mortgages backed by Fannie Mae and Freddie Mac.

Amanda Cashion from eMortgage Logic stated that she is a ""huge proponent of standardization."" However, she says varying client requirements will have to be aligned before standardization can take place across the industry.

In the meantime, Cashion says whenever there is a discrepancy between MLS and an agent's own observations, the agent should contact the client to see how to proceed. Various clients may have different rules or preferences.

The same goes for when an agent is having a hard time finding comparables. Froelich said if an agent wants to include more comparables than the form allows, agents can use the comments section of the BPO form to mention any additional comparables and explain their relevance.

He also warns that ""there should be a compelling reason for leaving the neighborhood."" If an agent must rely on comarables outside the property's immediate neighborhood, he or she should provide an explanation.

Cashion and Shirley Mastenbrook of Fannie Mae both agreed that being an expert in the area is the first essentiality for a quality BPO. If an agent is not an expert in an area, it is far better to decline the assignment than to turn in a subpar BPO, they said.

Cashion also warned agents that straying from the information provided in MLS could be considered fraud.

If an agent does encounter a discrepancy between his or her actual observation and the data on MLS, the variance should be noted on the BPO, she said.