Are Property Values Really Dropping?


   I haven't done thousands of BPOs, also called Broker Price Options or Unofficial Appraisals, but I've done enough. Lots of times companies will hire a company or a real estate agent to do BPOs when someone is borrowing money on their home or close to foreclosure. These BPOs are done at quite a lot less money than official appraisals by Appraisers, and I'm not sure what method an Appraiser uses, hopefully not this one. Back to the original title though. Are houses really losing their value, or are housing values the being dropped by design? You decide.

   I have been I guess one could say lucky on the BPOs up until today. All I had done thus far have been either doublewides, modulars, and single story ... can't remember if I had done 2 story or not. What I had not done however were houses with basements that were either partially or fully finished. Now I've spoken with a few other agents after today who agreed that they followed the company's instructions and only went by the main level square footage when pulling comps. Now for those who aren't familiar with how these values are obtained, especially in foreclosures, let me explain.

  You begin by pulling the tax card or records to obtain the "Assessed Value" which usually will give you a reference if you are unfamiliar with your area. You look at data. Location, square foot, type of building, number of rooms, acreage, past sales prices or "Solds" as new as you can get them, type of sales, ones on the market or "For Sales" of like or similar properties. All these in combination determine the "Market Value" or appraised worth. When foreclosure properties sell in an area of like or similar property and regular property sales are slow, REO or Bank Owned and Short Sales are used which will drop the value of other properties in that area. Hence all property values drop. Banks hire companies that sub out work to agents in the field during a foreclosure. Whole businesses have been developed around foreclosures and all that goes along with the process.                

   Today's was a bit different. I will not mention names but if this goes very far, the company  should know, I kept the emails. The property being valued was listed and a short was attempting to take place. On the Listing sheet it stated 1762 square foot of living space. The Tax Record showed 1762 sq ft of finished space. The man has been paying taxes on 1762 sq ft and the people buying the property on the short sale were buying 1762 sq ft. When the fin al valuation was submitted, it was rejected due to the wrong sq ft. On the main level was 1370 sq ft and the basement 392 sq ft of living space finished, the rest was unfinished. The company wanted documentation as to the 1762 sq ft, so I faxed it. They still wanted a reset. I called and explained that I was unable to give an honest market value at 1370 sq ft because all records showed 1762. We discussed that the price would be drastically lower at 1370 and that all the comps supporting the market value would be less thus lowering the market value. That in my mind would be unfair and false. 

  Correct me if I'm wrong here but if when determining the true value of a house you cannot count any finished basement as the total square footage, why then does the Assessors Office when determining your taxes? Why would houses be sold counting the square footage in the basement and loans be based on that square footage if in a BPO they don't count? Are in ground homes taxed by their square footage? Maybe it's just me but somebody is pooting under the covers. Why does this added living space count in everything except figuring the market value of a foreclosure? Why are people taxed on the square footage that is finished in the basement if it does not add to the property value?

 So, how does this effect market values in houses? This BPO and others will be used in determining like or similar properties in the area, including yours and mine. Now maybe I'm wrong as it would appear that this is a requirement in a BPO and that most of the agents I spoke with said they are all done like that, but that doesn't make it right. I was told that if I did not correct my BPO that I wouldn't be paid and that it would be sent to another agent. I'm hard headed and so I agreed that another agent should be sought. I'm not sure how this stacks up legally but I know how I feel morally. Some of us do not have a price. Should the company ever read this and figure out who I am and who they are, or another company that wants BPOs calculated in this manner... don't call me.