Banks Defrauding Banks

In short sale negotiations, we often run into a very difficult situation when there is a 1st and 2nd lienholder on a property: The 1st agrees to provide a small sum to the 2nd from the proceeds of the short sale, but the 2nd tells us that they will not agree to release the lien unless they get thousands more. The 1st refuses to provide any additional funds and tells us that they don't care where the money comes from for the 2nd, but it isn't coming from them. The seller is broke, the buyer wants a bargain, and consequently the property cannot be sold without the 2nd getting more funds. If the purchase price increases, the funds to the 1st increase, but the amount for the 2nd stays the same. No deal = Foreclosure.

These funds have to come from somewhere, and the 2 lenders are asking us to work within some very challenging and grey areas. We work for the seller and we need to get the home sold, so this requires creative solutions and, very often, financial sacrifices on our part to get it closed. If only the lenders could be cooperative and honest with each other to get these off their books.

A Quick Lesson in Broker's Price Opinion (BPO)

A Quick BPO Lesson

The BPO (Broker’s Price Opinion) is the most pivotal element of the short sale, since the lender’s valuation of the property is determined by this appraisal.

Whatever value is provided to the lender from the BPO will be the number from which they will decide what they will sell the property for. Consequently, the agent or appraiser that performs this valuation has the future of your deal in his or her hands!

Having knowledge about how the process works can be the difference between a closing and a lot of work for nothing. Here’s a brief description of the process and some tips to make it successful:

You will receive a phone call from the agent or appraiser who has been contacted to do the BPO on your listing. Please be as responsive as possible and return the phone call as soon as you can. Be polite, respectful, and friendly to this person, and accommodate their request for an appointment in a timely manner.

Normally, they will have a specific date and time by which the BPO needs to be back with the lender, and if this is not met, the appraisal could be assigned to another BPO agent, or worse, the file could be closed.

You need to attend the BPO! The BPO agent will not request for you to be there, but he or she needs to gain access to the property, so let them know that you are the only one that can get them in. They may be real estate agents with access to RMLS lockboxes, so assure them that you are the only one with access to the property.

It is imperative that they meet with you at the property so that you can properly advocate for your seller. Otherwise, they will not learn the background of the situation, the distressed nature of the property, have the right comps, or know the repairs required. You must provide this data and information, so have low comps, a contractor’s repair bid, and a smile when you arrive at this appointment!

Be at least 15 minutes early to the appointment, since BPO agents often arrive early to do outside measurements of the home. Being prompt is respectful and gives everyone the opportunity to do their job and then move on to the next order of business.

Befriend the BPO agent, provide them with your data, and let them know that it is a short sale. As well, tell them the offer price currently on the home. BPO agents will come in all personality types, so do your best to read your audience and let them know about the sad situation the seller is in.

Don’t be pushy or aggressive, just be a helpful person with information that helps the seller and yourself get a favorable valuation of the home. Building relationships with these agents is crucial, since you may see each other again and again, and you will want to work well together for positive results.