When the BPO finally gets into the short sale lien holder’s hands, that’s when the bank makes their counter offer to the short sale buyer. Recently, I had an offer of over $300,000 and the bank made the counter offer at $195,000. I thought I was going crazy until I contacted bank supervisors and learned that the BPO came back at $195,000—despite the fact that the listing agent and buyers firmly believed that the property value is over $300,000. Talk about a poor BPO.
On the flip side of the coin, I’ve got three or four short sales under my auspices where I have had to submit value appeals because the BPOs came in too high. Again, this is likely due to the fact that the BPO agent was unfamiliar with the property or the surrounding area.
What can be done to resolve this problem?
When your short sale receives a bank counter offer that is so dramatically opposed to your purchase contract, this is likely due to the poor BPO. One way to overcome this matter is to prepare some comparables and a value appeal (a two or three paragraph explanation). Your comparables should include three recently closed transactions (last 90 days) that support your property value. Send your value dispute package to the lender for review, and wait patiently for a response.
Another way to dispute the value is to have the buyer order an appraisal. While there is a cost associated with this method, it is often a successful way for the bank to verify the quality of their BPO.
No matter what—you should definitely not throw in the towel. While short sales are not for the faint of heart, they are going to be a great income stream in 2012. That, and BPOs, too.
Photo: flickr creative commons by quinet
