BROKERS PRICE OPINION, or BPO for SHORT SALE PROCESS
(HELP #9)
The most important fact the mortgage lender needs to know is how much the short sale property is worth? Most mortgage lenders hire a real estate agent/broker to help evaluate the short sale property. This evaluation process is called the broker’s price opinion or BPO. The BPO is one of the largest hurdles to clear when completing the short sale process. Our goal -- after submitting your initial package to the mortgage lender -- is to get them to order this evaluation and provide additional comparable sales to insure it is accurate.
The agent/broker will call to set an appointment to complete the short sale BPO. We meet the agent at the home and develop rapport. We share how comparable sales and other factors affect the short sale properties value. If handled correctly, some agents will actually disclose the price they submit to the mortgage lender. This is a huge help because most mortgage lenders will not disclose the ACTUAL amount of the short sale BPO. They want to get the most money from the process for their mortgage investor.
HOW WE HANDLE THE SHORT SALE NEGOTIATION PROCESS
(HELP #10)
Here are some highlights that help negotiate a short sale process. Every mortgage lender and negotiator has a different
approach when it comes to handling the short sale process:
- We are patient, yet persistent and helpful with the mortgage lender on the short sale
- We reinforce to the mortgage lender how a short sale helps save many costs associated with the foreclosure process: attorney’s fees, eviction procedure, delays from borrower's bankruptcy, damages to property in the process, etc
- We work to convince the mortgage lender how it's in their best interest to approve the short sale by accepting less money now
- If the mortgage lender responds with a higher short sale counter offer, we ask open-ended questions regarding their opinion of the validity of the short sale BPO to draw out more information
- We ask if they agree with the agent’s assessment and how it was obtained
- We expect a mortgage lender will actually accept between $10,000-$20,000 less for the short sale than stated
CAN SHORT SALE OFFERS BE REJECTED?
(HELP #11)
This is a familiar process: The mortgage lender receives the short sale BPO from the agent. It's higher than the offered sales price, so the loss mitigator requests that the contract price be increased. If this happens we:
- send back a "counter-to-the-counter" with the original offer price; we send additional comparable property information to prove why the mortgage lender should accept the original short sale offer
- send pictures of the neighborhood
- send copies of newspaper articles with “bad housing news”
- send a bid for repair estimates
We ask the following questions regarding the short sale BPO and process if the mortgage lender still thinks the short sale property is worth more:
- Are the comps an acceptable distance from the short sale property?
- Are the comps of comparable size?
- Does the square footage of the BPO match the original appraisal?
- What is the interior condition?
- How much allowance is given for the deferred maintenance?
- How high is the crime rate in the area?
These questions can help figure out if the agent did a good or bad short sale BPO. Then we can submit more information to the mortgage lender to prove their BPO is incorrect. As a last resort, we can ask the mortgage lender if they will accept an independent FULL APPRAISAL for review.
Remember that the mortgage lender wants to avoid the process of the buyer filing bankruptcy. They also desire to unload unwanted property without taking a huge loss. We will always help move the short sale process forward.
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