Here is a familiar situation:
The lender receives the BPO back from the agent. It's higher than the offered sales price, so the loss mitigator requests that the contract price be increased by $25,000. If this happens try this:
- Send back a "counter to the counter" with the original offer price. Send some more proof as to why no more money will be paid for the home
- Send pictures of the neighborhood
- Send copies of newspaper articles with “bad housing news”
- Send a bid for repair estimates
- Send them the crime rating for the area (if it's not good)
Some lenders will counter back on a lower offer price and say they will only pay a total of 5% commission. This will need to be adjusted on the HUD/1 and sent back to the lender for approval. Other lenders will reject certain fees on the HUD/1 and want them removed or moved to the buyer’s side. These are all points of negotiation.
If you still disagree with the amount the lender wants for the house, ask the following questions regarding the BPO:
- Are the comps an acceptable distance from the property?
- Are the comps of comparable size?
- Does the square footage of the BPO match the original appraisal?
- What is the visual interior condition?
- How much allowance is given for the deferred maintenance?
- Is the “crime” rating high/low?
By asking all of these questions, you can figure out if the agent did a good or bad BPO. From there you can submit more information to the lender to prove their BPO is incorrect. As a last resort, you can ask the lender if you can submit an independent FULL APPRAISAL, at your cost, for them to review.
Remember that the bank wants to avoid the buyer filing bankruptcy. They also want to unload unwanted property without taking a huge loss. Do not give up if the lender denies the contract, but keep trying to negotiate.
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