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As someone who is called upon from time to time to do BPOs, I can only say that lenders and brokers are usually separated by a company that actually orders the BPO. I've never had a lender contact me directly nor been directed to give a low or high estimate of value.
As for your specifics, I'm seeing on Zillow (OK I said it, I looked at Zillow's sold properties in your zip code in the past 90 days) shows a total of 94 homes. It's hard to tell how many of these are comparables to your home, but if I pick one from the midrange and look at the value of their "Zestimates" (I hate those things, but it's the only data I can use) it shows maybe a 10% increase in value over the last 6 months in your zip code. Nice to see that anyway.
You mention several times comps of a similar age and while that certainly is one factor in determining value, it is by no means the only one. You list a home at $85.5 psf and then show a home at $102 psf as a competitive comp (or at least the broker did) I would think that anything over $95 psf (10%) I would also categorize as overpriced as well. Active listings are an indication of the competition in the market and even though you show a range from $88 to $133, again you use the age of the homes only and not the square footage, number of bedrooms, garage, or any other factors.
All that being said, as zippyman suggested, I would contact the lender again and offer to pay for an appraisal rather than a BPO. Closed sales are the best indicator of value and in your area it looks as if there are plenty of them in the past 90 days to give an appraiser plenty of data to establish value. I would question any comp that falls outside of the 90 day window.
Is there a conspiracy here? I think not. Is there a poor quality BPO? Looks like it.
What number(PSF) do you have to come in at to get rid of the PMI?
84/sf, so quite a ways away from 69/sf the BPO gave me. Although 84/sf seems what you currently need to pay to buy similar properties in North Phoenix zip 85024.
Theres no incentive for the bank to remove the pmi, and penalties for the bank if they do it too soon, so you can understand why they're in no hurry to get rid of your pmi. That said, I've never heard of using a bpo to remove pmi, it sounds odd, and hard to support if the loan later defaults.
I see your point. The PMI removal via BPO was only my first step to refi via a proper appraisal. Since a BPO is cheaper than an appraisal I thought I would try that first and then apply for a proper refi. Since a refi costs ~2k+ I wanted to see if my LTV would hit the numbers so I could refi for sure. After the BPO is so off-mark I am gun-shy now. I will probably follow your advise and wait a few months until the higher comps are in place in our zip code.
Still I think it is outrageous.
If you firmly believe you have 80% equity, refinance now at a lower rate with a different bank. It will be worth it if you can get rid of PMI and rates are really low.
All: thanks so much. I have just received the results from my complained about the BPO. Freddie Mac incresed the home value from 141500 to 155000. That is still not enough to cancel PMI right away but with some further downpayment I can make it. To make matters even better, I will now try to formally refi my loan to also secure a much better rate on top. THANKS SO MUCH to all who helped me here - you are my heros. Without the advice and tips I would not have been able to formulate an appropriate response to FMC. I may need to ask zippyman about his latest impressions on zip 85024 valuation trends but I think rate-wise it is a very good time to refi. Thanks again guys - you are truly awesome here!!! P.L.
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To all: thank you. My complain worked.
