The Anatomy of Short Sales. Part 4 of 7: BPO – Broker’s Price Opinion (or appraisals)

As stated in my previous post on the importance of appraisals in short sales, it is pivotal for your property to receive an accurate appraisal for your home. Lenders have rejected short sale offers due to inaccurate short sale appraisals because they believe they deserve more for the property than offered.

After submission of the short sale package, the bank assigns a negotiator to handle your file. The negotiator then orders a broker’s price opinion and/or appraisal for your home to analyze what the fair market value is. This way, your lender can gauge how much they should be compensated for your home.

High appraisals = Not Good

In many cases, the brokers price opinions are inaccurate due to various reasons whether it is an inexperienced BPO agent or shady lenders/investors who try to influence the BPO in their favor (yes, it does exist). If the BPO comes in higher than fmv (fair market value), the lender(s) will expect more $$ from the home. Therefore, you won’t be able to retain any buyers and the short sale file will be open for years and eventually collapse. This is common.

The remedy is contingent upon the agent representing you on your short sale.
It is normal for our team of agents to dispute the value stated by the BPO agent. They not only go on site with the BPO agent with accurate information on home conditions but if the value comes in higher than what it should be, they send in what we call a “Value Dispute Package” which contains several comparable homes in the area as well as a list of reason why the property value should be lower than previously claimed. We have disputed numerous BPO’s which have been one of several determinant factors that has brought much success to our team of agents.

Next Post: 12/30/11 Friday

Peter