Although there are many changes in the real estate and mortgage banking industry, Roger Beane, founder and CEO of LRES Corporation, a valuations and REO asset management company, thinks appraisers will always be in demand. “The appraiser will still be involved five years from now because available data cannot tell someone what the inside of a property looks like or what condition it’s in. Appraisers use a set of tools and skills to go through the property and give it an independent value based on an interior inspection of that asset.”
In an interview with host Louis Amaya for "Mortgage Markets Today," Beane said purchasers still want the signature of a licensed appraiser on a document that indicates, “Yes, I endorse this particular property to be worth $XX.” He explained that “our customers have told us they are still very interested in having the signature from a licensed appraiser attesting to the value.”
Nevertheless, some people think that at times a BPO may be more accurate than an appraisal simply because it is prepared by someone who is actually participating in real estate sales in a specific area where an appraiser is not. “As an appraiser, I rely on closing figures and make adjustments accordingly,” Beane said. “I think the broker has a different set of opportunities to use through the valuation process.”
There are times when a BPO is needed, Beane admitted. “The broker has a lot of the same comp information and can use listings to develop a valuation. It all depends. If someone is going to be buying a pool of loans, they may want to know some of the potential future values, and so a BPO and some data points might be used for that type of valuation.”
However, for someone financing a specific property, they will want a zero-biased opinion, Beane believes. “At the end of the day, a broker is in business to list and sell properties for a commission. An appraiser is paid a one-time fee to value that property. In addition an appraiser is a neutral third party. That’s the basis of the difference between the two,” he explained.
Although some people prefer BPOs and others prefer appraisals, both can be benefited by the data that has become available through current and ever-evolving technology.
“I think technology used for evaluation purposes is absolutely a necessity and is a fantastic tool, especially when you look at different types of data,” Beane said. “It gives you a quick assessment and a tremendous amount of data. You can have as little or as much as you like to create models for your studies.”
He continued, “Another benefit to the institutional borrower is that through technology we can look at AVMs, data studies, and data mining. We can also look at trending across the country according to region, county, or zip code.” In real estate transactions of today, technology has become a large piece of the puzzle.
Buying single or multiple properties requires a lot of professionals to be involved because it’s not a simple process, Beane stressed. “There is the valuation process, sales process, and closing process,” he said. “Most importantly, the professionals making those decisions have to be equipped with the best possible information available to them in order to give the best answers and enable buyers to make the best decisions."
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