Why do lenders counter at the BPO price?

Real Estate Agent

I find it interesting that negotiators almost always counter at the BPO price. It's what their boss at the short sale department instruct them to do. I think the investors also like the files handled that way.

However, it does not mean that is their final offer. It just means that is their initial counter. Usually, if the negotiator does not tell you the BPO amount, you can guess that the BPO came back where they are countering.

Here are a few guidelines for what different investors are actually willing to accept on a short sale.

Fannie & Freddie will go as low as a net of 75% of the BPO. This sometimes happens in Florida and other states where the market has dropped a bunch. If the home is not in those areas, they will accept somewhere around 85%.

VA has a standard net that is 88.13% of the VA appraisal. I don't know if that number varies around the country. I don't think VA will make exceptions. However, you can contest a VA appraisal.

FHA will accept a net of 88% of the FHA appraisal for the first 30 days, 86% for the next 30 days, and 84% for the time after that. They will make exceptions. I'm sure it's good to back up your case.

On other loans, they will accept a net as low as 75% of the BPO. But, that depends upon the temperament of the negotiator. It also depends upon how good you are at selling them on why they should accept the offer. In addition, it depends on whether or not you know how to escalate the file. I give you good examples of how to "sell" the escalation in my escalation system.

If the negotiator tells you that the buyer must pay their counter, and the buyer isn't willing to raise their offer, then look at my notes below. See what the minimum net percentage of the BPO/Appraisal calculates out to. Is your offer netting them more than that number? Tell them you know the rules and that they need to follow them. The strongest guidelines are for FHA and VA files.

If you're running into problems with short sale files, then you probably need to look into the How to Escalate a File Course. Get more info at http://www.HowToEscalateAFile.com .

Are you looking for a marketing system to list more short sales? We have developed a system to farm and convert the Pre-Foreclosure Leads and the Expired Short Sales. It enables us to list a consistent number of short sales each month. Now we are offering it to other agents. Get more info at: http://www.AgentLeadExplosion.com .

You can get a copy of all the fax numbers for congress and a fax template to send to them here: http://shortsaleagentadvocate.com .

Got questions about short sales? Just ask.

Ben Curry & Chris Curry - Keller Williams Real Estate, Gainesville Florida.


We specialize in short sales in Gainesville Florida. Gainesville Florida short sale, Gainesville fl short sale, Gainesville Florida short sales, Gainesville short sale


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J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY

Ben this stuff is too good not to post in the short sale groups. 

Apr 28, 2010 12:06 AM #1
Stephen Howell
Coldwell Banker Residential Brokerage - Annapolis, MD
Annapolis MD Homes For Sale 443-994-8043

Ben ... this is excellent.  This is the only place that I could find the rule about accepting short-sale offers that are 88.13% of the VA appraisal.

I just got a short-sale approval for a VA backed mortgage in record time - it's been just a little over a week since we submitted the offer!!!  I have since gotten up off the floor.  But only after I was able to get an adjusted HUD-1 to the negotiator adding a $1,000 to the mortgage payoff to exceed the 88.13% of the appraised value.

The negotiator call and said "you're just a bit short of what I need to approve this".  So I asked her what she wanted the payoff amount to be and she spilled the beans "88.13% of the appraisal".  I told her I didn't know the appraised amount.  She told me.  Cool!!!  But, how was I supposed to know about 88.13% rule for VA short sales???

While the rules might change from time-to-time, if I know the rules, I know how to help sellers counter short-sale offers.  Without knowing the rules, how can I effectively council sellers or buyers on what offers are likely to be accepted and which ones are likely to be rejected.

So, long story short, here in Maryland I can confirm that 88.13% of the VA appraisal was applied to approving this short sale.

Aug 21, 2010 01:18 AM #2
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