Standards, No Matter the Valuation Method

In response to the increased use of broker price opinions and other types of valuation methods other than appraisals, NAR has come out with what it calls its Responsible Valuation Policy statement.

It’s intended to provide a framework for the association’s volunteers, so when they need to make valuation-related policy that involves more than appraisals, they can do so in a more holistic way. Prior to the release of the statement and some internal structural committee changes, policies were looked at based on the type of valuation method.

If you’re interested in valuation policy issues, you might find this 4-minute video of interest. It’s intended to help explain how this internal revamping works.

The policy statement itself doesn’t weigh in on valuation methods. Rather, it says, in effect, whatever valuation method the situation calls for, there are minimum standards that have to be met: no conflict of interest, that they be done in accordance with NAR’s Code of Ethics, and so on.

In a nutshell, it’s a big-picture statement about meeting minimum standards regardless of what valuation method the situation calls for.

Access the Responsible Valuation Policy statement.

Watch video.

More from NAR’s Appraisal Insight blog.

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at rfreedman@realtors.org.

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Comments
  1. Tim in Fla

    This is way to funny. Seriously, standards for BPO’s ? Next you’ll want these providers to be educated, know the market, familar with valuation terminology and concepts. Its just to much. Stick with the “standard” $35 BPO report that will get you a listing or great listing price. Make up whatever you want. I don’t think anyone has EVER has lost a sales license for incorrect BPO.

    Try as you may, there is nothing you can do to become an appraiser and deliver “appraisals” without going to school, getting the experience and passing the exam. A BPO under any standards is just that…….a BPO.

  2. michael briant

    Realtors should NOT be preparing BPOs. These BPOs are used by the banks as appraisals. Realtors doing these cheap reports should check their E & O insurance for coverage & liability. The companies that order these BPOs charge the lender $ 100. & pay the Realtor who is stupid enough to do them $ 35. Realtors, please do not get involved with these BPOs, you will be sorry.

  3. Danny

    Realtors, you will NOT get a listing by doing BPOs. The BPO companies do not hand out listings and a lender is not going to give a listing to an agent who has influenced the listing price. These BPOs are poison. Stay away from them.

  4. Ken

    BPO’s have been a great source of income for many Realtors. I believe they have kept the hungry among us in the business in a market that may not have allowed it any other way. Not only do these reports put food on the table, but they give the person completing them a better view of the market their in, and that will help them throughout the rest of the business.

    I have received REO listings due to BPO work. Anything I can do to put my name in front of an Asset Manager will help and my inventory of REO properties continues to grow. Banks do not utilize BPO’s in all the same ways as an appraisal and are not legally allowed to use them as appraisals or for certain issues.

    The BPO has a place and provides a service that would otherwise be required by an appraiser at an inflated cost. They save money for the banks, which does benefit everyone even if we don’t want to admit it. I know the banks aren’t well loved these days, but extra money out of their pocket will be passed on to everyone.

  5. bpos can be very lucrative … and when done right, with integrity, great experience can be gained about a wide market area … yes there are some dangers …. do it right and you will not have to worry about the bad things

  6. Mark Street

    If a new set of standards actually improves the quality of BPOs, I.E. somehow makes them more reliable, I am all for it. I have to admit I am a little skeptical. Did the Home Valuation Code of Conduct [HVCC] improve the quality of appraisals? I think not.

    The only thing that makes a real estate value judgment, or any other kind of judgment, worth the paper it’s printed on is the application of knowledge, experience and integrity. No amount of integrity will produce acceptable results if the author is an honest nitwit neophyte.

    Realtors have been properly warned to quiz appraisers about their competence to perform any given assignment: How familiar are you with this location/neighborhood/project? Where is your office? How long have you been doing appraisals in subject location? I get these questions frequently, and I welcome them. Any Realtor who cannot answer this kind of quiz with confidence [and a high score] has no business doing BPOs. Any Realtor who does possess the expertise to face such questions has no business selling this service for thirty bucks when he or she could be out listing and selling property.

    I have seen any number of deals go sideways when banks will not budge on a price set by a BPO, and an equal number where the banks are the losers due to a lowball BPO. In every case the BPO was idiotic. The only consolation is that, for once, the joke is on the banks. Had they spent $250 for a proper driveby appraisal, or even less on a proper desk study by an appraiser, they would have saved money either way.

    Stay away from this. No matter how much lipstick you put on BPOs, they’re still pigs.

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