How to Influence the BPO Value

The critical nature of the BPO and its value to the success of your short sale cannot be overlooked. The BPO can make or break your deal. Knowing this we need to do what we can to 'help' that value come within a range acceptable for your short sale to be approved. This all asumes that you priced the home reasonably to start.

What I am going to suggest is not unethical or improper by any means. In my humble opinion it all falls under your fiduciary responsibilities to your client, the owner of the home (not the bank).

Any short sale offer you send over should contain a one page document signed by your owner giving signed permission for the Interior BPO AND noting you as the interior contact to gain access. If you don't have one of these already just take a standard 3rd Party Authorization form that you used to allow the bank to speak with you about your client's loan. Edit that to be your new 'Interior BPO Access' form.

When you get the call from the BPO agent be there when they arrive for the Interior BPO. Bring your comparables that support your price, if repairs are needed then bring quotes and information on those repairs. Detail anything you might feel would help the agent. Remember to be polite and almost casual about it all. You know 'oh, I forgot but I gathered a copy of the comparables we used when taking the current offer, I thought they might be helpful to you'. Some agents may be offended and ignore your offering. But many will be thankful for the details hopefully bring the BPO value in range of where you need it to be.

Many of us have done hundreds if not thousands of BPOs ourselves in the last year alone. Bring this knowledge into play when thinking about the BPO value. Knowing the systems these companies use and the software we are aware that many of these systems throw out warning messages when the final suggested value is not in range with the current active list price for the subject property. Knowing this our standard practice after ratifying an offer is we change the list price in the MLS to be slightly under our contract price. We also know that many agents are just cranking out these BPOs and it's their main form of income. Often when the error message pops up too many won't go back to find new comparables. Often the easiest thing for them to due is adjust their final BPO values they entered to fall in line with the list price. So if your offer price is below your list price by anything significant this can be a big problem for you. So after we have an offer and if it is below our list price we adjust the price in the MLS to match or be slightly lower than the offer price.

Caution, due this properly and in writing. I always bring a Listing Addendum with me to every short sale contract signing. I will have them sign this BEFORE the contract. If ever asked I can state comfortably that we changed the price prior to ratifying the offer.

As always check your local regulations and speak with your broker about this practice. Remember my Disclaimer. :)

What's the Magic Number When it Comes to the BPOs

There is a lot to consider related to the BPO (Broker Price Opinion) and how it can slow your deal, get your deal approved or send you crying to your mother because it ruins your deal. One of the most confusing parts of the BPO dance is how your offer price and the BPO compare to each other.

What value of the BPO can my offer be to still get an approval from the lender? This depends on a lot of factors but in general if your offer is at least 90% of the BPO value it should get approved without problems.

Did I read that right because I had deals at that value range that were denied? Remember one very important thing about negotiating, okay two. First know who you are negotiating with and what their real ability is to approve your deal. But most important is to remember when negotiating 'NO' just means you didn't ask for what you wanted the right way or to the right person.

So how do I change that 'NO' to a 'Hell Yes'? Escalate your offer to a higher power. Do it professionally, politely and detail your numbers. What is often most important is 1) What is the value of the home (BPO $), 2) What is the Offer Price, 3) What is the amount owed on the loan to the bank and 4) What are they getting from this offer?

How do should I escalate my offer? Check back soon for my post on Escalating your Short Sale offer. Once it is here you'll see 'Escalation' in the Topic Search at the top-left of the page.