Why Some Short Sale Banks Demand a Higher Sales Price Than the Market Supports

Great information for buyer's to know I always let my buyer's know upfront the Bank doesn't have to approve the short-sale. Thanks for sharing.

I've got two short sales right now that are condos where the BPOs came in way too high and there is no reasoning with the bank, or bringing cash to closing.  In fact, one neighborhood where one of the listings is located is having this problem with all of it's short sales.  The last sale was in July and that's all the appraisers/BPO agents see.  Meanwhile, run a market analysis for condos in that county and prices fall off a cliff after July.  So the buyers move from listing to listing, writing ressonable market value offers only to have the banks reject them.  It's insane.

Elizabeth, I have been saying it is the investor stupid for many months.  I do a few bpo's a month, not enough to make a living at it, but enough to keep keep my fingers in the valuation pot. I actually enjoy doing them, but then I am weird.  Anyway, what I say something is worth is not always what an investor will take. I did a BPO a few months ago on a duplex that I valued at 425K.  A few weeks later an irrate listing agent called me and asked how I could say the duplex was worth 500K. I I hadn't, but the counter came back from the bank at 500K. I was at a B of A short sale seminar where the head of short sales said the investor does not always care what the BPO came in at. They want what they want.

I've had banks raise the price on 2 of my short sales lately.

One I think just went with the first offer that was submitted and it was higher in the summer.

The buyers are OK with the price, but now we are told USDA is out of money and won't be funded again until mid January. Both lenders have given us an extension of Jan. 21st so it will be close.

Note to self: Do not accept a USDA offer on a Short Sale, they are both slow.

Happy New Year, Elizabeth!

Well said. I've experienced that a few times as well. On another note, I wanted to ask you now that you have your MacBook (I think you told us in a blog that you bought one, right?) did you buy a new business card scanner? And, if so, which one and do you like it? I'm beginning to do my research and remember you spoke very highly of a business card scanner earlier in the year. But, I think you migrated to Apple since then. 

Banks know the BPO is inflated.  I have had conversations with BPO agents who have even been told to increase their BPO value as the bank didn't think the value submitted was "high enough".  From one agent, I was told that he gave the bank one value and then the bank employee told the listing agent that the BPO had come in $20K higher!

Of course, complaining about it doesn't change much and talking to the 'bank employee' doesn't either.  The only way I have been able to get the bank to come off of an over-inflated value is by getting true and accurate comps on an easy to read spreadsheet into the hands of... (listen carefully, this is the kicker) someone who has the power to adjust the value in the system AND understand simple math and real estate evalauation. 

Why does the bank like to see high BPOs?  It gets most agents to counter buyers to an insanely high price... and for the most part, the buyers do come up a little.  If buyers never increased their offers, banks wouldn't be so stuck on this 'negotiation tactic' (AKA lie) that the value is much higher than the offer that was submitted.

Hope this helps for next time you fight the banks on BPO value.

Trent

www.TheShortSaleGenius.com