Comments on: The Short Sale “BPO” Quandary! http://ctlms.myproptrackr.com/2011/02/16/the-short-sale-bpo-quandary/ Pre-Foreclosure and Short Sale Solutions Tue, 02 Apr 2019 18:58:34 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: ctlms http://ctlms.myproptrackr.com/2011/02/16/the-short-sale-bpo-quandary/comment-page-1/#comment-24093 ctlms Thu, 20 Sep 2012 20:15:16 +0000 https://ctlms.myproptrackr.com/?p=380#comment-24093 If I were negotiating that short sale I would be asking the bank to order an interior valuation. Typically that is a BPO or Broker's Price Opinion which is done by a real estate agent. But sometimes the banks do order an actual appraisal. 99% of the time the bank does this anyway. The only lender I have seen commonly not do that is US Bank on loans they own themselves. Now if they still refuse I would be asking them if they can review an appraisal if it shows the banks price to be inaccurate. If they say they can review one to consider lowering their internal value, then it is your choice if you are willing to pay for one. If you are ordering your own appraisal, consider having your lender (assuming you are not paying cash) order the appraisal they will need for your financing. This appraisal will state right on it that it was ordered by the lender and the short sale bank will know there is less of a chance that the value was influences, VS the possibility that you just got a friend that was an appraiser to do it for you. If the bank orders their own value, someone will want to meet that person at the house and show them the comps and any inspection issues that affect the value so they can take that info into account when determining the value for the bank. Good luck. If I were negotiating that short sale I would be asking the bank to order an interior valuation. Typically that is a BPO or Broker's Price Opinion which is done by a real estate agent. But sometimes the banks do order an actual appraisal. 99% of the time the bank does this anyway.

The only lender I have seen commonly not do that is US Bank on loans they own themselves.

Now if they still refuse I would be asking them if they can review an appraisal if it shows the banks price to be inaccurate. If they say they can review one to consider lowering their internal value, then it is your choice if you are willing to pay for one. If you are ordering your own appraisal, consider having your lender (assuming you are not paying cash) order the appraisal they will need for your financing. This appraisal will state right on it that it was ordered by the lender and the short sale bank will know there is less of a chance that the value was influences, VS the possibility that you just got a friend that was an appraiser to do it for you.

If the bank orders their own value, someone will want to meet that person at the house and show them the comps and any inspection issues that affect the value so they can take that info into account when determining the value for the bank. Good luck.

]]> By: eml http://ctlms.myproptrackr.com/2011/02/16/the-short-sale-bpo-quandary/comment-page-1/#comment-24087 eml Thu, 20 Sep 2012 19:16:30 +0000 https://ctlms.myproptrackr.com/?p=380#comment-24087 I am in a short sale as the Buyer and I made an offer for $335,000 on a home that was listed at $399,000. The Seller owes $500,000 on the house (they bought for $120K in 1997. The Seller accepted $335,000 and presented this to the Short Sale Bank. The BPO came back from the Short Sale Lender as $396,000 and they never even visited the house! All on line. The real house comps in the area averaged $375,000. I had an inspection done and it needs a fair amount of work. It's been on the market for 11 months and I am the only offer (the other retracted). Should I pay the $350 to get an real appraisal done where someone actually goes on-site? I am the only offer so I don't want to end up bidding against myself. I am in a short sale as the Buyer and I made an offer for $335,000 on a home that was listed at $399,000. The Seller owes $500,000 on the house (they bought for $120K in 1997.
The Seller accepted $335,000 and presented this to the Short Sale Bank.
The BPO came back from the Short Sale Lender as $396,000 and they never even visited the house! All on line.
The real house comps in the area averaged $375,000. I had an inspection done and it needs a fair amount of work.
It's been on the market for 11 months and I am the only offer (the other retracted).
Should I pay the $350 to get an real appraisal done where someone actually goes on-site?
I am the only offer so I don't want to end up bidding against myself.

]]> By: ctlms http://ctlms.myproptrackr.com/2011/02/16/the-short-sale-bpo-quandary/comment-page-1/#comment-15495 ctlms Mon, 19 Mar 2012 13:06:32 +0000 https://ctlms.myproptrackr.com/?p=380#comment-15495 Hi Peter, thanks for the comment. To answer your question regarding who often disagrees with us on value even when the market has clearly stated their opinion based on the listing history. It is of course the banks. They do not accept listing history as a basis to dispute their value. If their value comes back to them somehow inflated, which is all too common, you need either sold comps or an appraisal to dispute it. Unfortunately sold comps are not always available, especially in a slow market, and often there is no one willing to pay for the appraisal. So it is just all that more important that the listing agent supply the BPO agent with as much relevant data as possible when the value is first estimated for the bank. That includes the before mentioned listing history. There is a much better chance of success if the bank has a realistic value to begin with. Hi Peter, thanks for the comment. To answer your question regarding who often disagrees with us on value even when the market has clearly stated their opinion based on the listing history. It is of course the banks. They do not accept listing history as a basis to dispute their value. If their value comes back to them somehow inflated, which is all too common, you need either sold comps or an appraisal to dispute it. Unfortunately sold comps are not always available, especially in a slow market, and often there is no one willing to pay for the appraisal. So it is just all that more important that the listing agent supply the BPO agent with as much relevant data as possible when the value is first estimated for the bank. That includes the before mentioned listing history. There is a much better chance of success if the bank has a realistic value to begin with.

]]> By: Peter Benson http://ctlms.myproptrackr.com/2011/02/16/the-short-sale-bpo-quandary/comment-page-1/#comment-15481 Peter Benson Mon, 19 Mar 2012 08:31:15 +0000 https://ctlms.myproptrackr.com/?p=380#comment-15481 Sean, I just found your blog and it mirrors my sentiments exactly. What is a BPO but an assessment of fair market value? And what better information for a BPO than a listing history that demonstrates appropriate reductions and days on market, until receiving the first offer, to point directly to a reasonable assessment of fair market value? Assuming a property is listed and sits on the market for at least the average DOM for that locale with incremental price reductions and then gets its first offer, that first offer is likely something near the fair market value. Now there are a few assumptions here: 1) No fraud from the listing agent whereby offers are ignored. 2) Reasonable reductions (5-10% reductions over 14 days to 1 month) 3) Sufficient days on the MLS to allow full exposure to the market. I would think that 60-90 days would be sufficient, but the longer the better. Your concept of starting 10% above what you perceive to be fair market value based on your CMA is a good one. If your first offer comes within a week of listing, it will be nearly impossible to argue that the property was not underpriced. While a CMA can give you an idea what a "similar" property would command based on sq ft, location, etc. There is NO BETTER way to assess fair market value of a given property than the listing history of that property, as it is a direct indicator of what the market will pay for that property. You mentioned that "not everyone agrees with you" on this concept. I would be interested in how someone could argue against the validity of this approach. Regards, Peter Sean,

I just found your blog and it mirrors my sentiments exactly. What is a BPO but an assessment of fair market value? And what better information for a BPO than a listing history that demonstrates appropriate reductions and days on market, until receiving the first offer, to point directly to a reasonable assessment of fair market value?

Assuming a property is listed and sits on the market for at least the average DOM for that locale with incremental price reductions and then gets its first offer, that first offer is likely something near the fair market value.

Now there are a few assumptions here:

1) No fraud from the listing agent whereby offers are ignored.

2) Reasonable reductions (5-10% reductions over 14 days to 1 month)

3) Sufficient days on the MLS to allow full exposure to the market. I would think that 60-90 days would be sufficient, but the longer the better. Your concept of starting 10% above what you perceive to be fair market value based on your CMA is a good one. If your first offer comes within a week of listing, it will be nearly impossible to argue that the property was not underpriced.

While a CMA can give you an idea what a "similar" property would command based on sq ft, location, etc. There is NO BETTER way to assess fair market value of a given property than the listing history of that property, as it is a direct indicator of what the market will pay for that property.

You mentioned that "not everyone agrees with you" on this concept. I would be interested in how someone could argue against the validity of this approach.

Regards,
Peter

]]>