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Short Sale BPOs are not necessarily made equally!

Ever been in Short Sale negotiations and had the lender say that their BPO came in higher than what your comps/report on the property is showing? Ever had them question your current list price? Here are few tips to consider when you are preparing your Short Sale request package to submit to the lender:

Short sale can be considered when the owed amount on the home is less than the value and the bank agrees to write off the difference.
Short sale avoids foreclosure.
Short sales are most common in a declining market.
Short sales can be a win - win in a bad situation: Borrowers can do short sale and avoid just walking away, foreclosure or bankruptcy and bank receives the majority of their money back.
Short sale comps will affect the market - which can be a down side

I don't know about you but I sometimes question the bank's BPO or appraisal report.

Traditional BPOs usually come in below the current listed price especially when DOM (days on market) is high.

However: Short sale BPO are commonly different! They commonly come in higher than the current list price because of the comps and the lender of course is not going to question a higher report. The DOM (days on market) and /or your current list price does not weigh much on the bank's BPO because they cannot or do not trust that the property has been exposed enough to obtain higher offers. There is an assumption that it has not been exposed enough.

Short Sale tips:

Lender is going to get their own BPO and if the property is over a certain price range - some lenders will also order an appraisal
Avoid meeting or talking to the bank's BPO agent. The lender's BPO agent is to remain neutral.
Do not offer the bank's BPO agent your comp package, repair estimates or your 2 cents. Let them do their job without interference from you or the borrower.
If this does happen, it could really jeopardize your request
Don't over emphasis DOM and your list price - without showing without a double what the comps are coming at and how long other properties have been on market before they either sold or are pending or still active
Don't be surprised if the bank's BPO comes in higher than your comps and list price reflect - because it seems it is expected that it will come in high - its common!!
BIG PLUS: Always let accurate comps dictate the property's list price and your short sale report on the property. Work at keeping a short sale a win-win situation for the borrowers and of course it will help the bank get this default off their books!

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Posted by Rosemary Brooks -Mother & Daughter (866)-750-8282 on 07/17/2008 05:24 AM

Comments (9)

bpo, broker price opinion, preforeclosure, foreclosure, reo, bank owned property, stockton, family realty group, rosemary brooks

This post has been included in California Information San Joaquin County, CA Information Stockton, CA Information
Post is included in group: Short Sales and Forclosures ONLY
Post is included in group: Posts to Localism
Post is included in group: Sharing Information of Short Sales
Post is included in group: REO and BPO Assistants
Post is included in group: Short Sales for Dummies

9 Comments on Short Sale BPOs are not necessarily made equally!

Rosemary,

Thanks for the post. Always important to use the most accurate data (last three months). I have been successful with lenders, because I use the most accurate comps that are nearest the subject property. I also add narrative that an appraiser from outside the area, may be unfamiliar with.

07/17/2008 07:03 AM

by William Collins, Broker Associate (ERA Queen City Realty)

William ~ thanks for that point. From what I was told -- it is common that lenders expect their BPO to be higher because of the reasons I said... and to me, that is not necessily the case. They are just assuming that agents are not doing and using the correct resources to figure out their list price or their comps. This kind of thinking can affect the negotiations.

07/17/2008 10:58 AM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

I always meet the broker or appraiser at the property and I try and level with them.

07/18/2008 01:29 PM

by Jonathan Christopher

Rosemary - I don't hesitate to inform BPD agents who need help. I recently had an agent do a drive-by BPO and not use accurate square footage ignoring my MLS notes about below grade square footage. She was going to come in significantly high for the wrong reason. Unfortunately, many inexperienced agents have jumped onto the BP0 bandwagon.

07/20/2008 10:22 AM

by Wendy Rulnick "Its Wendy!" Destin Florida (Rulnick Realty, Inc.)

I always meet the appraiser or broker. I want to make sure they are aware of any defects in the property and any other factors that may impact the value. I have yet to have an appraiser or broker have a problem with it. In fact I have developed relationships and good contacts through BPO's and appraisals. I would however caution not to get in the way of or argue with the lenders appraiser. Be respectful of each others expertise and you will create goodwill and a great working relationships.

07/28/2008 11:13 PM

by Dawn Uselding Short Sale Negotiator (A New Dawn Real Estate Services, LLC)

Wendy - go idea. Sometimes we let comments like do not talk to the listing agent regarding the property stop us from seeking all the valuable information we need to make a solid decision.

07/29/2008 04:30 AM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

Dawn - its like what I said to Wendy. We have to take those extra steps to help with the process - regardless to what the instructions are. Because above all we need to be sure that the property is evaluated correctly - otherwise the lender will never really know what the value is.

07/29/2008 04:32 AM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

Rosemary, I have found that controlling the BPO is one of the BEST ways to assure the Short Sale and I have a 98% success ratio. I meet the BPO agent and educate him. For the $40.00 these agents are getting, they will welcome your help. You'd be amazed at the number of them that had NO idea that this BPO was for a pre-foreclosure, so they planned on using regular comps.

08/17/2008 07:38 AM

by Vicki, Broker Owner, Exit Platinum Realty, IL foreclosures

Exit Platinum - thanks for the tip. Good success ratio - right on!

08/17/2008 11:30 AM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)