| Oh, the games people play, especially in the real | | | | the games. So how are the pros getting BPO |
| estate business. This is especially true in the short | | | | valuations that work for them and the bank? |
| sale world with broker price opinions (BPOs). | | | | 1. Always remember that the BPO agent is only |
| For those of you not familiar with the lingo, a BPO | | | | making about $50-$75 so they want this done |
| is an estimate of value, like an appraisal, but is | | | | with little friction.... also remember that the bank is |
| performed by real estate agents. As it was put | | | | paying their bill so they want to make the bank |
| by one rather biased appraisor in an article | | | | customer happy; |
| recently, | | | | 2. Well before the BPO agent arrives, the short |
| "Unlike standard property valuations performed by | | | | sale house is marketed on MLS by the investor. |
| licensed appraisers -- which can run to hundreds | | | | They start the price at the highest value that |
| of dollars -- BPOs often cost $50 and are | | | | might work and then start dropping the price |
| performed by real estate agents who may have | | | | some set amount (typically $5K- $10K) per week. |
| minimal or no appraisal training and are subject to | | | | At the higher prices, frequently no house |
| no regulatory oversight." | | | | showings occur; i.e., nobody is interested. As the |
| Of course in this topsy turvey market, we have | | | | price drops, you will find a price where a few |
| found that some very knowledgeable BPO agents | | | | showings occur and then finally a price where lots |
| have a much better handle on pricing than some | | | | of showings occur. For a good short sale investor, |
| appraisers but that is a different story. | | | | their job is to explain to the bank's BPO agent |
| As any experienced short sale investor will tell | | | | that no showings occurred until they reached a |
| you, the BPO is the KEY TO MAKING A DEAL | | | | certain price..... One could argue that this is a good |
| WORK. Essentially, a loss mitigator for a bank has | | | | data point for determining true market; |
| certain lattitude to get deals done that are within | | | | 3. Next, the short sale investor will be very well |
| some % of the BPO. As an example, if the BPO | | | | prepared..... Lots of comps, lots of repair |
| comes in at $150,000, then a loss mitigator may | | | | estimates, and any other justification that they |
| have full authority to accept offers of $130,000 | | | | can provide to the BPO agent. It makes the BPO |
| or higher. | | | | agent's job easier and helps them truly evaluate |
| If the short sale offer is above that magic | | | | real value. A skilled investor can work magic at |
| threshold, poof the deal gets done, the loss | | | | this stage. |
| mitigator clears their desk, everybody is happy. | | | | 4. And of course, the short sale investor |
| Below that number and you may as well try | | | | ALWAYS, ALWAYS meets the bank's BPO agent |
| pushing a wet noodle up Mount Everest. Each | | | | on site so they can explain their point of view. |
| lending institutions have their own guidelines and | | | | For the short sale investors who understand how |
| these can definitely vary with time.bpos | | | | to "play the game", they get 1 out of 2 deals |
| Many, many investors get stuck at this stage | | | | approved and their are some really good |
| simply because they don't understand how to play | | | | investors that are hitting 90% approvals. |