Is a BPO the Same as a Professional Appraisal?

BPO’s, otherwise known as ‘broker price opinions’ are often used by lending institutions to obtain the current market value of distressed properties including short sales and foreclosures. In addition, brokers and realtors often use BPO’s to help justify a suggested list price for those looking to sell their home.

The Coyle Group - BPOBPO appraisals are NOT completed by professional real estate appraisers and instead, are usually completed by real estate brokers and are far less detailed than that of a professional appraisal completed by a professional real estate appraiser.

Depending on the type of information required, brokers may provide either a drive-by or internal BPO. Drive-by BPO’s are often used for properties that have gone into foreclosure as they allow brokers to gather enough information without having to contact or dialogue with the foreclosed property owners.

Internal BPO’s require more detailed information on the property which can only be obtained by gaining interior access to the property. Internal BPO’s are often used for homeowners involved in a mortgage refinance, loan modification, or short sale.

During an internal inspection brokers gather information about a property’s interior and exterior condition allowing them to more accurately report gross living area, condition of the ceiling, walls, flooring, mechanical systems, countertops, sinks, tubs, fencing, roofing, siding, swimming pools, and more.

Both internal and drive-by BPO reports include year built, lot size, gross living area, number of rooms, property condition, information pertaining to the immediate neighborhood, and often additional information regarding the number of homes listed for sale or rent in the area.

BPO’s and their subsequent property value assessments often require listing the total number of foreclosure properties within a 5-mile radius because when a high number of foreclosed homes are present, most often property values of all homes in the area decline.

In short sale situations, accurate BPO appraisals have often been known to reduce principal loan balances by as much as 15-25%. While this amount is substantial for mortgage lenders it’s still more cost-effective than going through the process of foreclosure.

One important note is that the ‘The Dodd-Frank Wall Street Reform & Consumer Protection Act’ prohibits BPO appraisals from being used as the primary basis for determining property value when real estate is used as collateral to secure the loan. So in any situation, it is always best to consult with an attorney or real estate broker to ensure a BPO is legal and acceptable in your case, as your situation may require a more detailed appraisal performed by a professional state certified real estate appraiser.

I hope you found this helpful and if you have any additional questions, thoughts, or comments please leave them down below.

The Coyle Group, LLC is one of the most well-respected and sought after appraisal firms in the greater Philadelphia area specializing in residential and commercial appraisals for divorce, bankruptcy, estate, date of death, tax appeals, pre-listings, and more. For more info contact us at 215-836-5500, http://www.thecoylegroupllc.com, or email us at appraisals@coyleappraisals.com.

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We’re Moving!!!

The Coyle Group is pleased to announce that on October 10, 2014  we will be expanding to a new office.  We will be moving to 433 Germantown Pike, Lafayette Hill, PA 19444.  Only our address will change.  You will find the same great people and service at the new location.  Even our Phone and Fax numbers will be the same.  Join us in celebrating!  We look forward to assisting you our clients and friends at our new location for years to come!  Click below for our Moving Notice and map.

 

The Coyle Group - Were Moving Sml

 

 

 

 

 

 

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Geographic WHAT?!?!

The Coyle Group - Geographic Competency - Philadelphia AppraisersYou may have heard the term Geographic Competency as it relates to appraisers. It’s been a hot topic in the appraisal industry for the past few years. It basically means that an appraiser has to be knowledgeable and capable enough to produce accurate and reliable appraisals within a specific geographic area. The appraiser should also have access to data about a geographic area. It’s the coupling of local knowledge and accurate data that can make the difference between a reliable report and one that’s not worth the paper it’s printed on.

As the appraisal market began to change over recent years, many appraisers found themselves expanding their coverage areas in an effort to stay busy. For some appraisers this meant working in areas with which they were not familiar. This often resulted in reports that were poorly supported and wildly off the mark.

If an appraiser finds themselves in a situation where they do not feel Geographically Competent, they have a few options. All are designed to protect the user of the report from getting inaccurate information from the appraiser.

1) They can decline the assignment

2) They can obtain the knowledge necessary to become competent to appraise in a certain area

3) They can seek assistance from another person who is Geographically Competent in that area

Over my 15 years of appraising in the Philadelphia market, agents have shared stories about appraisers coming from miles away to complete appraisals. My favorite is a tale of an appraiser from Parsippany, NJ who drove two hours (both ways) to complete an appraisal in Philadelphia. That’s insane! Not to mention that after time and travel the appraiser was literally working for peanuts!

But keep in mind that an appraiser doesn’t have to live close to a property in order to be competent to appraise there. Most appraisers are capable of appraising in several different counties or even states. I have an appraiser friend who lives in Lower Bucks County and routinely appraises homes at the New Jersey shore. It turns out that he has a house down there and actually worked in that market for several years. He’s competent to appraise there even though he lives in PA.

If you find yourself in a situation where you are not sure if the appraiser has experience appraising in your area, talk with them about it. Interview the appraiser. Ask about their experience in your area. The answers you receive could save you from a “bad” appraisal.

Do you have any stories about appraisers traveling far and wide to look at properties? If so, please share them.

 

The Coyle Group’s team of Philadelphia appraisers is a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing appraisals.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

 

 

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What Philly Agents Are Saying About 2014

As a Philadelphia Real Estate Appraiser, I know what trends I’m seeing day-to-day in the neighborhoods of Philly. However, I thought it would be fun to ask some area Agents what their thoughts were on a couple of issues. Below are the questions I asked along with some of the responses from some of the Philadelphia region’s top agents.

1. How would you describe the Spring market in Philadelphia Metro area so far? and where do you see it going for the remainder of 2014?

2. What do you think has the greatest influence on the market right now…Inventory? Interest Rates? Buyers back in the market?

 

The Coyle Group - Mark WadeMark Wade

Center City Condos

www.CenterCityCondos.com

I hear a lot of talk about the up’s and down’s of today’s market. And what most Realtors are witnessing is multiple offers, properties selling at or above asking    price and a decreased “days on market” statistic.

For the majority of the Center City market, there are more buyers than available inventory and the shift in that relationship will give rise to actions that we see more of today than we would have even six months ago- such as multiple offer bidding. I just encountered three offers on the same home in one day and that home had sat idle for almost two months.

Also becoming common are full asking price offers or even over asking price offers. I think it makes sense (many buyers see the time as being right to snag a condo out of the clutches of others and are therefore willing to put their best foot forward). I am now telling my buyers that IF they see a home they want – do not hesitate to go in quick and strong. Because nothing is more painful than a bidding war. Good for sellers, not so much for buyers.

Lastly, Realtors I speak with also confirm that they are seeing a decrease in the “days on market” calculations. Many homes are selling within days, even hours after being listed for sale

I think the biggest influence today is the lack of overall inventory.

 

The Coyle Group - Dan CaparoDan Caparo

Coldwell Banker Preferred

Vice President
www.DanCaparo.com

Although we had a setback in sales due to the harsh winter for the first quarter for 2014 the spring real estate market has arrived and is brisk for buyers and sellers alike.   Our Real Estate market is built around school year more so than the seasonality of the warmer months – they just happen to go hand and hand.   People like to have their children finish school at their current district and start fresh with a new one by September.   There is a considerable inventory shortage in our regional marketplace and well-priced homes don’t last for more than a week.  I still find that price points of $800K+ are moving along in a more healthy fashion but still not to the level of the under $800K markets.

A housing shortage has a great impact followed by the continued challenges of mortgage financing and our tight money policy.  As the mortgage market opens up and loosens its restrictive barriers and other investors [in addition to Fannie / Freddie] enter the home finance market we will see continued improvement in unit sales volume and appreciation.  I believe that rates shouldn’t be a problem until they begin to reach 6%+ because at that point we will see affordability issues.

 

The Coyle Group - Matt DonnellyMatt Donnelly

Coldwell Banker Preferred

www.donnellyrealestategroup.com

BUSY! Any properties hitting the market that are priced right, move in ready, and in a semi-desirable location are going under contract within 3 weeks on the market. With rising interest rates and more consumers being approved for mortgages I expect 2014 to remain a hot market. Buyers are ready to purchase but need to act quickly because there is a lack of inventory of good, saleable listings.

There are plenty of buyers in this market, and interest rates are still historically low. The greatest influence right now appears to be lack of inventory. We need more sellers!

 

The Coyle Group - Frank DefazioFrank DeFazio

Berkshire Hathaway HomeServices Fox & Roach, REALTORS
www.CenterCityTeam.com

The spring 2014 market is off to a hot start likely due to the pent up demand from a frustratingly cold winder and fears about potentially rising interest rates.  Demand continues to outpace supply and so we are seeing a lot of multiple bids and escalation clauses which is driving home sale prices up. As long as inventory is low and demand is high prices will continue to increase, which is great for sellers but not for buyers.

 Low inventory. Agents have been pounding the pavement for listings since January of 2013 but demand is strong and homes that are priced well and move in ready continue to sell in days, often with multiple offers.  Builders have taken note and new construction inventory is coming towards the end of the summer but for now low inventory continues to cause feeding frenzies and high competition among buyers.

 

I’d like to thank Mark, Dan, Matt and Frank for their insights.  I find it interesting that they all cited “low inventory” as being the greatest influence on the Philadelphia 2014 real estate market.   I couldn’t agree more.  This market is quickly turning into a text book Sellers Market.  We all know when inventory is low and demand is high, prices will rise.  That’s good for everyone…except maybe Buyers.

The Coyle Group’s team of Philadelphia appraisers is a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing appraisals.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

 

 

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PMI Removal

The Coyle Group - PMI RemovalIf you bought a home with less than a 20% down payment, chances are you’re paying Private Mortgage Insurance (PMI).  This is a cost that your lender adds to your mortgage payment to insure their risk exposure, should you default.  Depending on the amount of your mortgage, your PMI payments could be a few hundred dollars more per month.  Some lenders use the 1% rule of thumb.  That means you will pay 1% of the loan amount until the equity threshhold is met.  If you have a $200,000 loan, your PMI could be around $200 per month.

But don’t worry; PMI is not forever unless you put less than 10% down and took out an FHA-insured loan, then you will have PMI for the life of the loan.  Check with your local lender, typically will be removed once your equity position reaches 22%, meaning your loan is now 78% of your purchase price or appraised value.

“Well, how do I know that my equity has reached that magic number?”

Typically, once your Loan to Value Ratio (LTV) has reached 80% of your property’s original appraised value, your currrent mortgage service provider will allow you to have PMI removed, upon request.  You have to be proactive in initiating this conversation.  They will not simply remove the mortgage insurance until, by law, your LTV drops below 78%.  When it does, your mortgage servicer is required to remove the insurance.

There are other situations that could prompt your lender to waive PMI.  Perhaps, you made some improvements and/or renovations to your property which increased it’s value.  Another scenario is an appreciation in the market.  While I know the word “appreciation” has been missing from our real estate vocabulary over recent years, there are whispers of it in the air.  Now could be a good time to take a shot at getting your PMI removed.

AGENTS:  This presents a great opportunity for you to reconnect with former clients and possibly help them save some money.

“How do I go about showing that my equity has increased?”

First, pick up the phone and check with your lender to see if they have any special instructions for requesting PMI removal.  Different lenders may have different requirements.

There are other important criteria you must meet if you want to remove PMI on your loan:

  • requests must be in writing;
  • the borrower must have a good payment history and be current on your payments;
  • your loan servicer may require you to certify that there are no subordinate liens on your home (such as a second mortgage);
  • your loan servicer may require you to ensure (i.e. an appraisal) that the value of your property hasn’t dropped below the value of the home when you bought it.  If the value of your home has decreased, you may not be able to cancel PMI.

Most lenders will require a current appraisal of your property.  Some will allow you to select your own appraiser; while most will require that you use an appraiser from their panel of preferred appraisers.  Either way, confirm this with your lender.  You don’t want to have to pay for two appraisals.

If an appraiser visits your home, be sure to share with the appraiser any improvements that you haved done to the house since you bought it.  This will help give the appraiser a better understanding of where your house was relative to its current, improved condition.

The time to act is now.  Every month that passes is just another month you could be saving on PMI payments.  Look at it this way, if your PMI is $150 per month, that’s a savings of $1,800 per year!

If you have any questions related to PMI removal or real estate appraisal matters in the Philadelphia area please feel free to give The Coyle Group a call 215.836.5500 or visit our website www.thecoylegroupllc.com .

Special thanks to Mark K. O’Neill, Senior Loan Officer, with  Mortgage Master for his assistance with providing background on PMI and fact checking.  If you are unable to get PMI removed, you may want to contact Mark.  He may be able to refinance your loan without PMI provided you have at least 10% equity in the home.

The Coyle Group’s team of Philadelphia appraisers is a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing appraisals.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

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Ignore the Groundhog, Check this Out!

The Coyle Group Philadelphia Appraiser - GroundhogAfter what seems like an unrelenting barrage of snow storms, ice storm, polar vortexes, days off from school and the dreaded 2-hour delay, I have some hope to offer.  This is not hope derived from some rodent (yes, a groundhog is a rodent) in a town in the middle of Pennsylvania.  This is hope in form of a visual aide based on historical trends.  Sounds enticing, huh?

Just as we know Spring will come to Philadelphia, we also know that with the warmer weather comes The Spring Selling Season!  This is the annual phenomenon where Buyers and Sellers come out of their wintry hibernation and start moving real estate.  It’s a great time of year for agents and appraisers alike.

In an effort to provide all with hope, I’ve prepared this graph of the Average Sale Price in Philadelphia from January 2000 to January 2014.  The graph clearly shows a growth trend over the past 14 years.  You can see the build-up from 2000 through the peak in the summer of 2006.  You can follow the market downturn from 2006 through 2011.  In 2012, the market appears to begin a slow turn around and incremental movement in a positive direction.

The Coyle Group Philadelphia Appraiser - March Trends 2014

Click on the graph for a larger version.

I’ve highlighted the month of March for each year in yellow to help illustrate my point.  Nearly every year, March marks the beginning of an upward swing in the market.  The red line is a trend line that was added to provide even more hope and good vibes.  Almost every year, the red line shoots up dramatically after the yellow March column.

I’m sure the same will happen this year.  So be hopeful!  The Winter will end, Spring will arrive and the Philadelphia Spring Selling Season will start very soon!

The Coyle Group’s team of Philadelphia appraisers are a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing appraisals.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

 

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2014: Year of Recovery

Happy New Year!  I’m confident that 2014 will be the year of real estate recovery, in the PhiladelphiaThe Coyle Group Philadephia Appraisers 2014 region.  With that optimistic statement out of the way, let’s get down to reality.

While I do expect markets to appreciate (yes, remember that word), I don’t expect to see a huge upswing in value.  Instead, I expect that we will return to nice, steady, predictable increases in value.  Think in the range of 2-4% per year.  Sure, there will be some areas in the Philadelphia market that will outperform but, for the most part measurable, healthy growth will be the new norm.

What will keep values from ramping up like back in 2004?

Inventory is relatively low.  However, there is a huge shadow inventory of foreclosed properties that banks will start releasing to take advantage of the healing market.  In fact, a trend that I’ve noticed in the past few months is that more and more banks are pumping money into rehabbing their stock of foreclosures in an effort to get top dollar.  In 2014, it’s pretty likely that foreclosures will compete rather strongly with conventional sales in some Philly markets and the surrounding suburbs.  This, along with the typical Spring listing surge, will influence supply.

Agents tell me that there are plenty of buyers waiting in the wings.  However, interest rates are expected to increase.  This will keep some buyers sidelined, especially the first-timers and low-income groups.  This will influence demand.

It all boils down to Economics 101, supply and demand.  It always does.  I think that each will be kept in check by the other and that growth will occur, it just won’t be a rocket ride.  That being said, I expect a pretty healthy Spring Selling Season as eager Sellers and Buyers enter the market.  This should facilitate an evenly paced recovery with real legs.

What are your predictions for the 2014 Real Estate Market in the Philadelphia region?

Best of luck in 2014!

The Coyle Group’s team of Philadelphia appraisers are a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy and Tax Appeal.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

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2013 Philadelphia Region’s Most Expensive Homes

Let’s face it, 2013 is pretty much over.  With Christmas falling on a Wednesday and New Year’s Eve and Day following shortly thereafter, there are only about 8 “real” work days left.  So, it seems like a perfect time to take a look back at the 2013 real estate market.  In particular, let’s take a look at the ultra high-end sales in the market.*

The Philadelphia Metro Area (Philadelphia, Montgomery County, Bucks County, Delaware County & Chester County) had its fair share of heavy hitters this year.  In total there were 20 sales over $3,000,000 and there are currently five sales pending over that amount.

The Coyle Group - Bucks County MansionBucks County posted a $3,300,000 sale with the property at 6356 Meetinghouse Road, in New Hope.  In this case, the price gets you a 20-year-old, 12, 376 Sq Ft, Colonial situated on 92.78 acres.  A perfect little “country” getaway home for New Yorkers.

 

 

The Coyle Group - Villanova MansionIn the Villanova section of Delaware County there was a $4,000,000 sale at 265 Abrahams Lane.  What’s interesting is that price was achieved at auction, down from the original $7,695,000 list price.  Looks like a pretty good deal for the 12-year-old, 10,268 Sq Ft, Mansion sitting on 9.90 Main Line acres. 

 

The Coyle Group - Philadelphia Rittenhouse Mansion

 

At $4,200,000 cash, the “McIlhenny” Mansion, at 1914-16 Rittenhouse Square was the highest sale in Philadelphia.  This mansion faces Rittenhouse Square and is built on five property lots.  The 8,600 Sf Ft structure was listed as being “in need of complete restoration.”  Kind of pricey for a fixer-upper but, that being said, there is nothing else like it in Philadelphia.  New owner Bart Blatstein just received the “go ahead” from the planning commission for renovations to the historic property.

 

 The Coyle Group - Chester County Mansion

Saddle up!  If you like privacy, views and horses, and you happen to have $5,000,000 lying around then you could have purchased the property at 2300 Hilltop View Road, in Chester County.  This 27-year-old, 10,061 Sq Ft, Converted Barn sits on 143.70 acres.  This is a true equestrian property with 14 stalls, paddocks, indoor riding ring, tack room and abuts 800 acres of preserved land. 

 

The Coyle Group - Montgomery County MansionThe honor of being the most expensive home in the Philadelphia Metro Area for 2013 goes to 648 Creighton Road, in Villanova.  This Tudor Mansion is over 80 years old and boasts 13,464 Sq Ft of living space situated on 3.13 acres, in Lower Merion.  This is a classic Main Line residence with a $5,700,000 price tag to prove it.

 

 

The Coyle Group’s team of Philadelphia appraisers are a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy and Tax Appeal.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

* Only sales advertised in the MLS were included.  No private sales were used.  Photos are courtesy of TReND MLS.

 

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The Coyle Group – YouTube

The Coyle Group Real Estate Appraisal Video

Please watch our new video that outlines many of the services that the real estate appraisers at The Coyle Group provide to attorneys, accountants and private individuals across Philadelphia, Montgomery County, Bucks County, Delaware County & Chester County.

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Finished Basements & GLA

  

The Coyle Group - Finished BasementThe other day, I was asked to speak to a group of Caldwell Banker Preferred agents at their sales meeting.  It was a lot of fun and some really great appraisal questions were asked.  One question jumped out at me and I’d like to share it with you because it comes up all the time.

 Is finished basement space considered part of the overall living space of a house?

 Good question.  My answer to that is…well, it depends on how you look at it.  If you’re a real estate agent or even a homeowner, chances are you are going to view that space much differently than an appraiser.

 Most agents and homeowners want to play up the positive attributes of a property.  So it stands to reason that the finished basement space should be lumped in with the above grade living area.  Bigger is better, right?  What’s more impressive, a 3,000SF house or a 4,500SF house? 

Well, appraisers view this situation a little differently.  You see, most appraisers will measure the square footage of a property using the American National Standards Institute’s (ANSI) guidelines.  Those guidelines state that any living space located below grade (by 1” or more) is to be considered finished basement space and, as such, is not to be included in the overall Gross Living Area (GLA). 

“Whoa, now!  That’s crazy” you are probably thinking. 

What if it’s a walk out basement?  Still finished basement space and is not include in the GLA.

What if it cost $100,000 to finish the basement and there’s a 12 person home theater, wine cellar, exercise room, guest bedroom and a full bath?  Surely, that has to be included, right?  Nope, still finished basement space and is not include din the GLA.

What if three sides of the basement have exterior walls and only one side is below grade?  Sorry, still finished basement space and is not included in the GLA.

So are you saying that finished basements have no value?  No, not at all.  Finished basements do add value to a home in most cases.  It’s just that the space will not be added to or valued the same as the above grade GLA.  On an appraisal report there is an entire area dedicated to the value added by a basement and any associated finished space in that basement.  The rationale being that most buyers within a given market will not value finished basement space the same as they would value above grade living spaces. 

The Coyle Group - Bsmt Grid

So as an Agent or Seller, what do you do?  Well, I recommend describing the two spaces separately in the MLS description.  For example, if the house has a combined living area of 5,000SF, explain that 4,000SF is above grade living space and that 1,000SF is in the finished basement.

For a copy of the ANSI Guidelines for measuring a home shoot me an email at mcoyle@coyleappraisals.com

If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

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