Thanks for sharing. Stick with it!

Nathan - It's just sad to see buyers lose opportunities only to find out that it was sold for much less later.

Mark, BPOs in my area are a joke. Normally the REALTORS(R) that are doing them are way out of the area and they are usually inexperienced REALTORS(R) who have the time to do BPOs. The pros that could do them right are too busy to work for $50. At least that the way it is in Poinciana Fl.

Bryant, I'm glad that you came forward to question the experience of the agent.  You get what you pay for but unfortunately, this low quality work is what the banks try to hide behind.

The whole BPO thing has always puzzled me because of the conflict of interest.  I think appraisals by licensed appraisers should be done, completely independent of any future listing agent.  But that's way too logical...

Margaret, I agree with you about the appraiser issue.  If we could just cut through the waste, we could start to really settle at a bottom in the market faster.

If somehow you use inflated comps for your BPO. You will risk the chance that if you obtain the property as a listing, the Bank or Asset Company will grade you on the BPO value vs. the final sales price. If it is too high.....you are assuring yourself of never getting another listing from that lender or asset company.

Robert, thank you for providing this valuable insight!

I have been working on a couple of short sales and have been encountering some of the same issues and just posted a blog to the same effect today.  I am seeing a conflict of interest, particulary if I am aware of some character issues with the BPO agent.  I am discovering that there are quite a few middlemen who have fees to collect if a property goes into foreclosure, but not in a short sale, and it appears they are the obstacle to short sales.  Have you noticed how fast things move once they are foreclosed and for surprisingly less?  And how many parties are involved in collecting fees (maintenance companies, servicers, brokers, inspectors, etc).  When a good short sale offer is turned down, makes you wonder what is really going on behind the scenes.

That's the way business is. With a short sale only realtors make money. In an REO,  Asset Managers get a cut, title companies of their choice make money, agents of their choice make money and maybe lender of their choice make money. This is a money driven industry, not common sense industry.

Here is free list of Broker Price Opinion

I'm looking for some avenue to hold the mtg o. or the appraisars liable. This is the 3rd short sale that the bank has denied do to THEIR BPO's. We were at market value everytime. Then your correct they went ahead & listed it for less than what your offer was! That's because the broker that takes on the REO knows at that time there's NO realistic way get the BPO #. This last contract, the buyers couldn't come up if they wanted to due to the fact they had a legitimate appraisal that that came in alot lower than the banks. The comps add up to the legitimate appraisal. Mtg co. have got to be held accountable the these foreclosures. If someone was doing their job right we wouldn't have so many. Short sales aren't for taking advantage of the mtg industry. They're to allow a home to sell for market value. That's all they get or less at foreclosure.

Where's the recourse? What can we do to stop this? It's not fair to the buyers or the sellers for that matter.

Any answers???

Realtors making money on a short sale?  You have got to be kidding.  I avoid them like the plague; not because they often cut the commission, but because my client never knows when he/she actually has a deal or not.  The banks don't want to lose $$ so they hold out for as long as they think another offer might be submitted. 

It's a nightmare for buyers and their Realtor.  And I don't know anyone who would do a BPO that wasn't legit....it just doesn't make sense.  There's no profit in BPO's, it's only when you're successful in bringing a good buyer to a willing seller that any money is made, and that doesn't happen unless the pricing is right for both.  It's a frustrating process, but everyone in the deal is no better off than the other guy - it's just that some are able to endure the pain better than others - namely the banks.  They don't like going through this either, and they have reasons for holding out that you may not understand, but they do their best and have other assets to keep them operating that most individuals don't. 

Short sales are a way to accommodate both the troubled owner and the lender, but it is the lender who is being asked to make the accommodation.  No surprise that they don't not want to be rushed into accepting more loss than necessary.  Although, it makes perfect sense that they would want to make a deal then move on - they accept a huge risk in the property being degraded while they make everyone else suffer from their interminable indecision. 

It's just not right to blame the Realtor for this. 

Ken - I've modified the way that we handle short sales and it has actually taken me to the point whereby I now am targeting them.  After numerous conversations with employees of banks that have let me take them out, I've learned that BPO's don't have as much weight to them as I thought before.  It seems that banks figured out that the BPO's submitted by randomly selected agents were too far off... maybe they were fishing for listings?

Moving here from Florida has just been a frustrating experience all around...House in FL is being rented...we are renting in LA...and have preapproval to purchase a house...

Submitted an offer on a home July 12th...Here we are...18 days later...still not having heard anything from the bank...The home has been on the market 18 months...and now we are being told that the bank is going to do a BPO...and we have to wait another 5 - 7 days...

From everything I've found online...the bank will not only refuse our offer....(Because we're too low) but they won't counter to their asking price...we just have to keep submitting offers until we get it right...

My problem...is that...I believe the house is listed about $35 / square foot too high....I don't believe there's any way the BPO comes back in my favor...and at a certian point...we can't afford to buy and fix the house...we are trying to leave ourselves that buffer...in our offer price...

When a house has been on the market this long...clearly there are many 'issues' going on...it needs fixing...and the bank doesn't appear to be ready to stop the bleeding...and sell to willing buyers...

Frustrated - You're still early in the game.  How do you know that you are too low?  The home has been on the market for 18 mos.  All the bank cares about in the short sale besides trying to squeeze as much money out of everyone is:  "Would we make more money as a short sale or as a foreclosure?"

Look at it from that perspective and ask if it would be better for them to foreclose than to take your offer.  If they would get more money after foreclosing, raise your offer.

Is a comparative sales analysis to best way to gauge what a bank might get if they foreclosed on the property?  (i've asked my agent ot start this process...as I don't seem to have access to any of that data)

I may believe that the house is worth $300,000, but because of it's 'issues' including repairs and location....put it in an area where the MOST expensive comp sale is $250,000...then that's the best guess for a foreclosure sale?

Whereas, I believe that because the loan on the house is for +/- $320,000 and the BPO could come back significantly higher than our 'low ball' offer...

(For reference...I offered $88 per square foot...$250k puts it at $100/sqft...and the loan amount is $128/sqft.......My original guesstimate was that the loan amount was at $104/sqft...giving me some negotiating room...)

Great questions!  You're on the right track.  Look at it like you're buying a used car from a by owner.

There's the "blue book value" which, in real estate, would be your comparative sales analysis.

Then, you've got to ding the value of the vehicle (or raise it depending on extras) for dents, mileage, cigarette holes in the seat, bald tires, etc.  Just like the $50,000 in repairs it looks like your home needs.

Now, take the banks attention off of the BPO.  Just like the "Blue Book" doesn't buy cars (that's what the dealerships say when you are wondering why you're getting $5,000 less on your trade it) the BPO needs to be made WORTHLESS.  Your agent and the listing agent do this by providing the bank with their own CMA's supporting YOUR value not the BPO's.

From here, the bank will have carrying costs, legal costs, damage to repair, etc. that they will have to spend money on.  At the end of the day, if you're offer is going to get them more money than a foreclosure, they'll take yours regardless if $500,000 is owed.

so...Long story....75 days worth....

We have recently submitted a new offer...having been told that the bank does indeed have a 'bottom-line"...

The offer has been signed by us...and the seller...and now needs to get some financial mumbo-jumbo worked out to then be sent to the bank for approval...

Needless to say...our patience is beginning to wear thin...but....the closing is set for October 16th...and we are...in theory...getting the house for $92 / sq ft.