In the world of real estate, a Broker Price Opinion (BPO) serves as a critical tool, offering an estimated property value that can be the difference between a speedy sale and no sale at all. While these assessments can offer valuable insights, they also come with a potential for pitfalls.
As a real estate professional, knowing how to navigate around common BPO mistakes is essential to ensuring accurate property valuations and safeguarding the credibility of your service. This article will delve into the most common BPO mistakes that land professionals can make, and most importantly, how to avoid them, ensuring your assessments remain an indispensable asset in the dynamic real estate market.
Broker Price Opinion Mistake #1: Using Bad Data
Using bad data is one of the most common broker price opinion (BPO) mistakes that land professionals can make. Bad data can include inaccurate or outdated information about the property, as well as incorrect or incomplete data about recent sales in the area. To avoid this mistake, land professionals should ensure that they are using reliable and accurate data sources when conducting a BPO. They should also take the time to verify the information they are using, such as checking the property’s public records, reviewing recent sales data, and double-checking any information provided by the property owner or client.
In addition, land professionals should be aware of any limitations or biases in the data they are using. For example, if recent sales data includes properties that are significantly different from the subject property, such as in terms of size or condition, this could affect the accuracy of the estimate. Land professionals should take the time to carefully review and verify their data sources to ensure that they are providing the most accurate estimate possible to their clients.
At National Land Realty, every land specialist has access to our proprietary land sales database, which allows them to pull in the most up-to-date comparable and area sales. This data is then formatted into easy-to-understand reports that look professional and allow a landowner to clearly see that pricing is accurate for their property. Not only does this save time in assembling data, but it also makes each landowner confident in your price opinion, meaning you spend less time on the market due to overpricing.
Mistake #2: Failing to Properly Inspect the Property
Failing to properly inspect the property is another common broker price opinion (BPO) mistake that land professionals can make. Proper inspection of the property is essential in determining its value accurately. Land professionals should conduct a thorough inspection of the property to assess its overall appeal. They should also take note of any unique features or upgrades that could affect the property’s value. In addition, land professionals should consider the property’s location and its potential for development.
Mistake #3: Not Having Strong Relationships with Local Land Appraisers
Not having strong relationships with local land appraisers is another common broker price opinion (BPO) mistake that land professionals can make. Appraisers can provide valuable insights into the local real estate market and can help to ensure that the BPO is accurate and reliable. Land professionals should take the time to establish relationships with local appraisers, who can provide insights into recent sales data, market trends, and other factors that can affect the property’s value. Appraisers can also provide an independent valuation of the property, which can help to confirm the accuracy of the BPO.
In addition, appraisers can provide advice on any unique features or upgrades that could affect the property’s value. By working closely with appraisers, land professionals can provide a more comprehensive and accurate BPO to their clients. Land professionals should seek out appraisers with local knowledge and expertise and establish ongoing relationships to ensure that they have access to the most up-to-date information and insights.
At National Land Realty, all of our land professionals have a built-in network of land vendors like appraisers on day one. This means that if you are new to a market, or new to land sales in general, you hit the ground running. By building these relationships they are able to get a better pulse on the market by gaining knowledge from the local appraisers as well as the potential for getting land buyer or seller referrals from them. Over time it becomes mutually beneficial for both parties because as our land professionals do more deals the appraiser will benefit from the details behind those sales. Accurate information for their land appraisals is very valuable as data on land sales can be hard to come by and slow to get from public sources.
Mistake #4 Presenting Your Valuation in an Unprofessional or Unconvincing Way
Presenting your valuation in an unprofessional or unconvincing way is another common broker price opinion (BPO) mistake that land professionals can make. Even if the BPO is accurate and reliable, it may not be convincing or effective if it is not presented in a professional manner. Land professionals should take the time to prepare a well-organized and professional report that clearly explains their methodology and the factors that were considered in the valuation. The report should also include clear and concise explanations of any assumptions that were made, as well as any limitations or biases in the data.
In addition, land professionals should be prepared to explain their valuation in person or over the phone, and to answer any questions or concerns that the client may have. This can help to build trust with the client and ensure that they have confidence in the BPO. The report should show comparable and area land sales as well as details on the background of each. These area sales should be clearly mapped so that the landowner can see the proximity of these sales to their property.
At National Land Realty, BPOs can be customized with our marketing team for landowners that have unique properties. Every Land specialist has access to a standard BPO format that incorporates quality data, maps, and detailed information about the subject property and comparables. If you are competing for the best listings, you want to stand out in every way possible, and a professional BPO is a clear way to separate yourself from your competition.
Mistake #5: Extreme Overpricing
Extreme overpricing is a common broker price opinion (BPO) mistake that land professionals can make. Overpricing a property can lead to it remaining on the market for an extended period, reducing the potential pool of interested buyers, and ultimately resulting in a lower sale price. Extreme overpricing can have significant negative consequences for a property’s sale, and it is important for land professionals to conduct a thorough and accurate analysis to avoid this mistake.
Broker Price Opinion Mistake #6: Not Being More Assertive in Requesting a Price Drop
Not being more assertive in requesting a price drop is a common broker price opinion (BPO) mistake that land professionals can make. When a property is not selling, it may be necessary to request a price drop to make it more appealing to potential buyers. This can be an awkward conversation if you do not put the steps in place in the beginning to ease this transition.
In the early development of a listing, an accurate BPo is essential in establishing realistic expectations about what a property will sell for. Make sure your landowner understands that your pricing is accurate and that you will recommend a price drop if their (higher) price doesn’t bring any serious interest. Having set this expectation beforehand makes this conversation much easier.
Another bit of data that will help you in requesting a price drop are the marketing stats for the listing. That’s why at National Land Realty we provide our landowners with automated reports as frequently as every two weeks to help them see the marketing metrics that justify dropping the price or keeping it where it is.
Broker Price Opinion Final Thoughts
A Broker Price Opinion is arguably one of the most important skills that a land professional can master. Done incorrectly, it can cause you and your clients to lose time and/or money, and done correctly, it will earn you not only more listings but more importantly, more sales. By avoiding these common mistakes, land professionals can provide more accurate and reliable BPOs to their clients, build trust with their clients, and ultimately grow their business.