We all know that the run-up in prices for Miami Beach real estate played a large part in causing the real estate market to tumble, and we’re still in the midst of a lengthy and delicate recovery effort. If some appraisers are to be believed, there may be another problem looming if something isn’t done to address it soon.
The problem comes with the federal government’s efforts to expedite short sales and the increasing reliance of banks to use the opinions given by brokers, also known as a BPO. These opinions usually result in valuations for property like Miami Beach real estate that’s cheaper and unregulated but can lead to something called “flopping”, an increasingly prevalent form of mortgage fraud. In order to save money, a lender can choose to pay a Realtor $40 for a BPO which is much less than the $350 or more than $450 it would cost to have a property professionally appraised.
On one end, some Realtors who deal with BPOs feel that appraisers are simply complaining about losing money, after all Realtors have a better grasp of what the market trends are. Now that participating banks can accept purchase offers that meet preapproved list prices determined by a BPO, does this raise questions about the long term future of Miami Beach real estate if the BPO trend catches on?