3 Tips To A Favorable Short Sale Bpo

A BPO (Broker's Price Opinion) is the ultimate key to a favorable short sale which is a discounted mortgage payoff. The main reason why anyone would ask for a short sale from a mortgage lender in the first place is because of a questionable fair market value. It is of utmost importance, 9 out of 10 times, that a BPO agent's opinion is as low as possible in order to justify a lower than full payoff offer on a property.

When a short sale work out plan is requested, a bank will not just accept a discounted a payoff without doing their own due diligence. It is also important to note that the Chief Executive of said mortgage bank will not come out on the road to access property by him or her self. Also, as of the time of this publication, they do not send an employee either.

The mortgage bank assesses the value of the collateral property by assigning a Broker's Price Opinion(BPO) to a local licensed real estate agent/broker or a full appraisal to a local licensed appraiser. These people are trained to give a professional opinion on the value of a subject property. They usually don't know if it is for a short sale or not. The lender believes whatever amount they report the value to be.

There are 3 important tips here to help you influence a BPO value as low as it can get without compromising the integrity of whoever they send out to your subject short sale property.

1. No Improvement Necessary before BPO

Like I said earlier, the purpose of a BPO is to evaluate the property. A BPO and/or appraisal are professional opinions. Even though it is professional, it is still an opinion. Under normal market circumstances, a property value will vary from one inspector to another. It all depends on how damaged the market is, the range in comparable prices and the psychological state of the inspector. Hint: If you tell them it is for a short sale, it de-values the property instantly by $5,000 - $10,000

If you clean a property and give it a nice curb appeal, it will increase the value from any appraisal stand point. In the same token, especially in a vacant property, previous tenants always leave dirt all over the place. There are usually damages or missing fixtures. These are common attributes in short sale and foreclosure properties.

Leave the property AS-IS before any BPO or appraisal inspection. This will de-value the property more than you can imagine. This is the most important key to you getting a well discounted short sale.

2. Show Up In Person

The short sale negotiator or a bank representative often will call to ask who the contact for an interior inspection will be before it is ordered. Make sure to tell them it's you and give them your contact number where you can be reached at anytime. Do not tell them that the tenants will be in the home and they can just knock. This is the beginning of short sale failure.

You should get the call yourself and return call as soon as possible if and when a BPO agent or appraisal calls you to get inside. During your call, familiarize your self with the inspector and specify to the inspector that the evaluation is for a short sale. Show up in person and on-time to the property for your scheduled appointment with the inspector.

Walk through the property with the inspector and chat with him about the Real Estate market, short sale and the industry. As you walk along, point out every negative attributes of the property jokingly but seriously. Remind him it's a short sale by talking in general about short sale.

Do not be a nuisance and be so obvious that you are influencing their opinion. Newsflash: That is exactly what you are trying to doing. You need to influence their professional opinion about the value of the property in order to maximize the discount margin for the short sale.

3. Prepare Comparables

The multiple listing systems (MLS) contain hundreds of comparables (comps). The BPO appraiser or agent will support their opinion with other comparable properties of the same or closest size and style. Access the MLS and pull some comps to print out and take them with you in a neat binder to the short sale BPO appointment.

Retrieve sold, active and expired listing comparables (comps) within 6 months and one mile radius to the subject. Pay special attention to listings that indicates subject to short sale. Of course, make sure that the listing price and/or sale price justifies the short sale offer that you gave the mortgage bank. Get access to the MLS through a local realtor if you are an unlicensed investor.

Many of the BPO agents will appreciate your effort because it makes their job easier. All they need to do is to make sure that they are not made-up comps by verifying MLS numbers. They will also verify that your comps are comparable by size and style of the property. Remember the fact that it is a short sale de-values it to them as well.

In summary, do not improve your short sale property in any way; don't even clean up or fix anything. Show up in-person and on-time with good comps to justify your short sale offer. Last but not least, create a rapport with the inspector. Usually, they will get friendly and like you and try to help by showing the bank the lowest number they can justify legally. They may even have short sale candidates to refer to you.

Note that a second and even third opinion may be ordered by the bank if the value comes back so low that they are taking a significant loss. This simply means you have to do the same thing over again. If you have a second lien, then you will need to do same. Get use to it since you will be making lots of money on each of your short sale deal.