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70 new form of BPO report that provided more detail. Today, instead of just an opinion of value, modern BPO reports do a better job of supporting the values returned by the professionals in the field, which makes it easier for report purchasers to make better decisions. Better information almost always leads to better decisions. Imagine if the broker told you that, "While 40% of the comparables used to establish this value are in areas that have been affected by distressed sales, this property is obviously in better condition for a number of reasons and would be valued thusly, with adjustments for condition and the improvements that I've noted." e new reports allow the professionals to tell this story and not just provide data on a form. Having a more complete story helps decision makers make sense of the market, especially in areas where there is a large disparity in property values in close proximity. With the market improving, bid prices on all properties, not just distressed assets, are rising. With falling housing inventories in many markets, the home buying process is becoming more competitive. is reduces the margin for error and makes it more challenging for investors to quickly identify products for purchase before they must compete with additional buyers. When investors were buying properties daily for 40 to 50 cents on the dollar, valuation errors were easier to ignore and less likely to seriously impact profits. ose days are gone. It's no different for servicing clients who are dealing with default and foreclosure. As the market improves and they push out REO inventory that may have been sitting on the books awaiting a better market, they want to maximize their return and reduce their overall loss severities as much as possible. Better valuation reports are the answer. TELLING THE WHOLE STORY e answer is providing a form that allows agents to tell the property's story. at can be challenging when the industry's reports are data driven, which they are by necessity. By giving agents a space to include a narrative, we have found that they are willing to add the information that helps purchasers make sense of the resulting value. Part of what makes a BPO a usable collateral valuation product is that the agent completing the report has actual knowledge of the neighborhood in question. ey travel to the home, view the property and compare it, neighborhood by neighborhood, for any value differences. ey can do this because they know the normal condition of a property in these neighborhoods and they know how to identity a neglected property. And then, the industry hasn't traditionally asked them for any of this information. Amazing! By reintroducing the narrative to the BPO, report purchasers are able to see what the real estate professional sees. ey see the property from the agent's perspective along with all of the comparables used to arrive at the value, next to each other with all the vital statistics. Purchasers can review the comps, almost as if they were visiting them personally. Everyone knows a picture tells a thousand words, but it's also true that having the story behind the pictures makes for better decisions. In cases where it is not immediately clear why a comp that may be of similar size to the subject property is valued differently, the narrative on that page of the report will provide the details, without the purchasers having to go back through the company to get more information. In some cases, we'll see a $50,000 difference in valuation between a comp and a subject property, but reading down the page, it becomes clear that one of the homes is situated next to a warehouse center or some other detracting factor. ese conditions are not always evident in the photo, but if we allow the agent to tell the story, it becomes clear. e consequence is that investors and servicers are better able to manage the risk in these deals. A NEW WAY OF DOING BUSINESS Making a new reporting paradigm work requires more than just providing more spaces on a BPO report. With more data comes the need to provide more quality control and the company that offers these new reports must be prepared to take on that role. In my experience, this has meant adding more staff so that every report provided by our broker partners in the field is reviewed by a human being. When we're giving these professionals the power to tell a story in their report, there can be no auto accept in the technology platform we use to accept them. It starts with ensuring that the report form has been completed. While this was once done by computers, which simply checked fields for values and possibly tested that value against a filter to ensure that it fell within a reasonable distance of an expected value, this can now only be part of the process. While we do use technology to check numerical data, the information we're asking for and receiving today goes beyond the raw numbers. Sometimes it's hidden in the photos, other times it's lurking in the prose, but the answers are in there and it takes a human being to determine whether the story is being properly told. "Even now, years after the crisis, there are still many communities where mortgage- free properties sit next to REO and market value for either property is not easily determined."

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