Why is a BPO Important to the Short Sale Process?
Hello and Happy New Year to you all! This is a very interesting article I read recently here on Active Rain. I thought I would reblog it here to it will get additional exposure. Thanks very much. Don
I have written plenty in the past about BPOs but have never delved into it specific to a Las Vegas Short Sale!
A BPO means “Broker Price Opinion” and they are not appraisals nor should one get them confused with appraisals. A BPO has a different purpose. It’s almost like being a “secret shopper”. When we are submitting comparables for a list price (NOT value, Nevada’s law is very strict,) we are also looking at a myriad of other items that may help or hurt with pricing and marketing of the home:
How is the home being marketed: Is there no lockbox or an uncooperative tenant hindering showings? Are there only 2 photos in the MLS?
HUGE price reductions in a short amount of time. This is commonly seen in short sales. The house is priced WAYYYYYY out of reach (2005, 2006 prices perhaps) and then kerplunk – usually within 10 days after listing the property a price reduction is seen – usually below what the other comparable homes are selling or listed for. The strategy should be a series of small price reductions over a longer period of time. Some lienholders ask for us to report listing history so no one is fooling no one with the huge price reduction in a short amount of time.
Subdivision activity - what is the lowest, median and highest price sold in the last year. It’s going to be a little difficult to get a short sale approved for less than the lowest price sold in the last year. There are some exceptions such as condition (fair to poor) and declining market.
Occupancy – this is huge because lienholders must protect their asset. If the home is vacant and appears to be deteriorating from BPO reports, the lienholder has every right to rekey the property for preservation which includes weatherizing and maintenance. The Las Vegas Short Seller must still maintain the property if they do not want to relinquish this right.
MULTIPLE BPOs are ordered and most are exterior – no appointment – just drive by - so there is no way to “cheat” the system with the agent who actually has an appointment to come inside to look at condition. Not everyLas Vegas Short Sale seller is trying to cheat the system, there are a few who try to take advantage but this is why multiple BPOs are ordered. There are checks and balances – and lots of “secret shoppers” driving by in the wee hours of the morning snapping photos of a property immediately after a default. Whether it is listed as a short sale– or not. A BPO obviously isn’t just about value or an appraisal – it’s about the bigger picture – making sure the listing is being marketed properly so the lienholder does not have any money left behind sitting on the table.
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