Drive-by BPO, also known as drive-by appraisal, is a tactic used by some real estate agents and mortgage lenders to artificially inflate the value of a property. This can be done by hiring a property appraiser to perform a quick and cursory evaluation of a property, rather than a thorough and detailed examination. The goal of this tactic is to make the property appear more valuable than it truly is, in order to justify a higher sales price or mortgage loan amount.
Drive-by BPOs can be detrimental to both buyers and sellers. For buyers, it can mean taking on a larger mortgage than necessary, or paying more for a property than it is truly worth. For sellers, it can mean receiving less for their property than it is actually worth. Additionally, drive-by BPOs can also harm lenders, as they may be basing their loan decisions on inaccurate information.
One of the main reasons drive-by BPOs are used is to avoid the cost and time associated with a full property appraisal. A full appraisal can take several days to complete and can cost hundreds of dollars. A drive-by BPO, on the other hand, can be completed in a matter of minutes and can cost significantly less. However, the savings in time and money are not worth the potential harm that can be caused by using inaccurate property valuations.
To protect yourself from becoming a victim of a drive-by BPO, there are a few things you can do. First, be sure to work with a reputable real estate agent or mortgage lender. These professionals should have a good track record of honesty and integrity, and should be willing to provide detailed information about the property and the appraisal process. Additionally, it is important to look into the qualifications of the appraiser who will be performing the evaluation. Appraisers should have a professional designation, such as the MAI (Member of the Appraisal Institute) or the SRA (Senior Residential Appraiser), and should have experience in the area where the property is located.
Another way to protect yourself from a drive-by BPO is to request a full appraisal. This can be done by working with a reputable appraiser, who will conduct a thorough examination of the property and provide a detailed report. While this process may take longer and cost more than a drive-by BPO, it will provide a more accurate valuation of the property.
In summary, drive-by BPOs are a tactic used by some real estate agents and mortgage lenders to artificially inflate the value of a property. These appraisals can be detrimental to buyers, sellers, and lenders, and can lead to inaccurate property valuations. To protect yourself from becoming a victim of a drive-by BPO, it is important to work with reputable professionals, to look into the qualifications of the appraiser, and to request a full appraisal. It is also important to understand that while the cost of a full appraisal may be more and take longer, it will provide you with a more accurate valuation of the property.