The most important fact the bank needs to know is: How much is the property worth? Most banks hire a real estate broker/agent or appraiser to evaluate the property. This evaluation is called the brokers price opinion or BPO. The BPO is one of the largest hurdles you need to clear when perfecting your short sale negotiations. Your goal -- after submitting your initial package to the lender -- is to get them to order this evaluation.
Make sure you let the lender know that you would like an interior BPO and not just a "drive by" evaluation. As we mentioned in Part 7, put this on your cover sheet when sending the package to the Loss Mitigation Department. If the lender states they already have a BPO be sure to ask them how old it is. Let them know, depending on how old it is, that there may be "issues" regarding the interior of the property.
The agent will call you to set up an appointment once the BPO is ordered. If you can fit it in your schedule, meet the agent at the home and feel out the situation. Explain the seller’s circumstance and why they can’t sell the home for what it may be worth. Share your comps and opinion of the properties value. However, do not be pushy with the agent/appraiser. They are professionals and may not take it lightly if they perceive you are trying to tell them how to do their job. Ask them questions and develop a rapport. Some will actually tell you what evaluation price they are going to submit to the lender. This is a huge bonus for you.
Most lenders will not tell you the ACTUAL amount of the BPO. If they do, don’t be surprised if it's higher than the agent/appraiser's opinion. Lenders have been known to "stretch the truth" to get the most money for their investor. Whatever you do, don’t say “The agent told me it was worth $$$,$$$." This only leads to confrontation and violates the trust the agent/appraiser placed in you.
Many short sales never occur because the BPO comes in too high. Don’t get discouraged, instead ask the lender if you can submit a third party appraisal for their review. Many times the lender will reduce their original price based on a 3rd party appraisal. Of course, this will cost you or the seller more money. However, it can prove to be profitable if it helps to get the sale closed. Keep in mind that once the lender receives the BPO (and perhaps the 3rd party appraisal), that's when the real negotiations can start!
Comments