Short Sales – Influencing The Brokers Price Opinion (BPO)

When you do a short sale, the lender most likely will order a BPO.

BPO stands for Brokers Price Opinion and is a process by which a realtor

appointed by the lender, comes out to evaluate the property and give his “opinion”

on what the value of the property is. So the lender sends a realtor out to the

property and it’s your job to influence the BPO to come down as low as you can.

This is the whole key to a successful short sale. This is why you want the lender to

contact you, so you can meet the realtor at the front door and influence their

BPO to come in as low as possible. To build your case, the first thing you

should do is show up with a list of repairs and estimates for the property. If you

have to go get a contractor to bid a job or repair, go get one. The higher the quote,

the better. This is good evidence. The second thing you should do is show up with

a list of comps in the area that are low. Most real estate agents appreciate you

doing some of their work for them. Provide them with the lowest comps you can

find and they will decide if they want to use them or not.

When you meet the realtor on the property steps, just tell him you are the buyer and

doing a short sale on the house. Then you will proceed to walk the realtor

through the property. When you are walking through the property make sure you

point any and every repair or problem with the property. Again, you are trying to

make the value of the home come in as low as possible. If you are dealing with a

nice house with minor cosmetics, you may really have to search for problems.

Then call him the next morning to see if he was able to get the price you wanted. Sometimes they will tell you sometimes they won’t. Just ask to find out. If they won’t tell you, call the bank. Many times they will tell you. You really have no control over this process. You can encourage the BPO to come in low, but this does not always mean they will come in low.

If there is someone living in the property, you may want to ask them to leave when

the realtor comes out to do a BPO. If they can’t, just tell them to stay out

of the way. Explain to them you will be trying to make the house value look as low

as possible. They may not understand why, just tell them it is the only way to save

their house. Also, tell them not to worry about cleaning up at all, leave it the way it

is. This is the one time your house can be a mess. You need to make the value of

the property look as low as possible.

If the loan on the property is FHA or VA, they will not take less than 82% of the BPO.

Usually you can expect the BPO to be in the range of 80-90% of the

repaired value. So if you have a house that is worth $120,000 after repairs, the BPO

you would guess to be about $98,000 to $108,000. Then multiply that amount by

82% and this should give you a good estimate of what to offer. If it is not a VA/FHA

loan, then you can offer whatever you want. It is a good idea to start low, just in

case your BPO comes back lower than you thought, you can always raise the offer. It

is an educated guess to find out what the BPO will be. If it comes back

high not in your favor, sometimes you can call the loss mitigation department and

tell them the BPO is way to high. Many times they will work with you and

order another BPO. Whatever you do, don’t ever give up. If they don’t accept it,

negotiate with them some more. Ask them what they are looking for, or what they

are trying to get. Sometimes they will tell you, sometimes they won’t. Be

persistence. Be patient. Ask, ask, ask. Part of being successful in this business is

how you negotiate. You don’t ever want to be rude to them, but let them know

where you stand. Make them aware of what’s happening to the property.

How to Perform an Interior BPO

The most difficult task of the interior BPO can be gaining access into the home. The property may either be vacant or occupied by tenant or homeowner. If vacant, the home generally has a lock box or supra key. If occupied, an appointment must be set to enter. In order to gain access for either case you must contact the real estate agent overseeing the property. Your local MLS will have their contact information, or the valuation company should provide it. That agent will provide codes to lock boxes or offer to set up an appointment with either themselves, the homeowner, or in some instances both. Most valuation firms will pay real estate agents $65-$75 per interior BPO for the extra work involved.

Tips & Tricks For Photographing an Interior BPO

1. Don’t delay

Valuation companies usually allow up to 72 hours to perform an interior BPO and you will get paid one and a half times as much as an exterior. The problem lays in the fact that gaining access to the property is sometimes out of your control when a third party is involved. Avoid procrastination and set the appointment well ahead of the due date. If the realtor has to cancel then you still have time to reschedule and complete the interior BPO on time.

2. Be firm and in control

Always remember you are working for the valuation company, not the realtor. When contacting the realtor in charge of the property, be assertive in scheduling appointments. If you have to meet with the realtor or homeowner, inform them when you will be in the area to perform the interior BPO rather than asking what time they are available. This method will work the majority of the time. You can keep your sanity by controlling multiple appointments throughout the day. Most agents are willing to bend to your schedule because they cannot receive a commission without you completing the interior BPO.

3. Politely ignore the realtor

If you are meeting with the realtor, chances are they have prepared a 10 page summary of data and documentation on why the property should be valued at the low end of the market. You will most likely receive a CMA and exaggerated repair estimates for the home. They will talk your ear off during the whole inspection to try to manipulate the interior BPO value. Inspect the house yourself and only note what you observe personally. Don’t just take their word for it. They are only pushing you to value the interior BPO low so the bank approves their short sale and they walk away with a commission.

4. Take note of visible damages

An interior BPO will need to address both interior and exterior repairs. It’s very important to photograph and document all damages. The lender will want to see the report reflect what is visible in the pictures. Repairs will ultimately affect the as-is value of the interior BPO. Make note of any repairs in the report when they are present in the home.

5. Double check your work

The valuation companies are pretty meticulous when it comes to photographs. If any pictures are missing or unclear they will require you to go back and take what you missed. You will lose a lot of time rescheduling an interior BPO and the other realtor won’t be a happy camper. This is not practical so re-check the pictures in your camera to make sure you have what you need before you leave.

Pulling Comparables

Generally, you should complete the report portion of the interior BPO after taking photographs of the home. Implementation of this method will result in more accurate as-is values if you personally observe the home and neighborhood prior to performing the report. In addition, the inspection will also be fresh in your memory.

To perform an interior BPO report, you must search for six comparable homes (comps) in the immediate area of the subject. Three comps must be sale comps; the other three must be listing comps. The selection of comps is determined using a variety of similarities to the subject property. These similarities may include size, age, and location to name a few. Adjustments on interior reports are also necessary and important for arriving at an accurate as-is value.

Interior orders are more work than exteriors but are ultimately more money. The main differences between the two reports will be obtaining access into the house and reporting the damages which may be found inside or outside the home. Easy enough for an additional $25.