When you request the Law Offices of Rajtar and Associates, P.A., to assist you with a short sale, the lender most likely will order a BPO. A BPO (Brokers Price Opinion) is a process by which a realtor/appraiser is appointed by your lender, and that realtor will come out to evaluate the property and give his “opinion” on what the value of the property will likely sell for to the general public.
The lender’s realtor will come out to your property and it will be your job to influence the BPO to be as low as possible so that it can actually sell to the public. This is, of course, the whole key to a successful short sale with the Bank. It is for this reason that you want the lender to contact you, so you can meet the realtor at the front door and attempt to influence their BPO to be as low as possible. The first thing we recommend is to have a list of repairs and estimates for the property that must be accomplished. If you have a contractor for a job or repair, go get one that can provide the highest quote possible, as this is good evidence to support your contention as to the value of the repairs required for the property.
Another thing you might do is to show up with a list of comparison properties in the area that are low that you are able to locate. Usually Real Estate Agents will appreciate that you did some of the work needed for them to sell the property. Of course, as we want the property to be able to be sold for as little as possible, its best to provide them with the lowest comparison properties you can locate and then, they will decide if they want to use the those Comps or not. Usually, they’ll take them and review them later.
When you meet the realtor (property appraiser) on the steps of the home, you should tell him you are the buyer and trying to get a short sale approved for the house. We then recommend that you do a complete walkthrough with the realtor and look at every part of the property. When you are walking around the property, always make sure to point our any and every repair or problem area with the property that you can locate. Of course, a good idea is to have already walked around the property so these are easy to locate. Remember your purpose, you want to try
to make the value of the home come in as low as possible so what you show the realtor can vastly affect the price. They have an obligation to report every material defect to the buyer, so you want to look for each and every problem at the property. Notwithstanding the above, if you are dealing with a beautiful home house with minor cosmetic issues, you may really have to search for problems. However, each defect when added to the appraisal can really affect the bottom line in the price recommendations.
After you have done the walkthrough, call the appraiser/realtor the next morning to see if he or she was able to get the price you wanted to sell the property for to a buyer. While usually, they will tell you, in certain circumstances, they won’t but ask regardless. If they really won’t disclose the information, call your bank. In this circumstance, they will often tell you as you want to be able to sell the property and how much it will sell for may influence your legal decisions on whether to keep the home or not. Regretfully, you really have no control over this process but you can encourage the BPO to come in low; and hopefully, the realtor/appraiser will issue their report according to the defects you point out. If they do, the property price will usually be quite a bit lower than was initially anticipated by the bank.
In addition to the above, if you have family living in the property, you may want to ask them to leave when the realtor or appraiser comes out to do a BPO. The family should be aware that you will be trying to make the house value look as low as possible. They may not understand why, and you should explain it is the only way to save the house. Also, this is also the time to tell them not to worry about cleaning up at all, leave it the way it is. This is the one time your house can be a mess. You need to diminish the value of the property to look as low as possible to get
the best out of a bank’s BPO.
Specifics: On property which is FHA or VA, the bank will not take less than 82% of the BPO. You should anticipate the BPO to be in the range of 80-90% of the repaired value (after all the things you pointed out to the appraiser. If the house is worth $120,000 after repairs, the BPO should be about $98,000 to $108,000. You can then multiply that amount by 82% and this should give you a good estimate of what is normally deemed an acceptable offer ($80,000-$88,500). Yet, you should also be aware, if it is not a VA/FHA loan on the home, then people can offer whatever they wish. It is a good idea to start low, just in case the BPO comes back lower than you thought, you can always raise the offer.
It is always an educated guess to find out what the BPO will be. If it comes back higher than anticipated, in other words, not in your favor, sometimes a call to the loss mitigation department at the bank will help; you can explain the BPO is way too high and sometimes, they will work with you and order another BPO. This is especially true as there are new incentives for the banks to agree to short sales (We’ll cover that in another article). Whatever you do in the short sale process, don’t give up. If the Bank does don’t accept the offers you deem appropriate, you can always negotiate with them for further adjustment. You can also ask them what they are looking for, or what they are trying to get, and sometimes, they will tell you the numbers they seek. Of course, sometimes they won’t. Be persistent, as while one person may be unresponsive at the bank, the next phone call goes to a completely different person. Be patient and courteous. A good portion of the short sale is in how you negotiate.
The Law Offices of Rajtar and Associates can help you with every aspect of a short sale, and if we can help you, please contact us.