As part of the short sale process, the lender will contract a third party to complete a Broker’s Price Opinion (BPO) to determine the fair value of house. As the short sale agent, you are not allowed to directly influence the BPO’s price. For example, you cannot ask the BPO agent to come back at a specific price to meet your short sale. However, you can help provide information so that the BPO agent can make an accurate evaluation of the home’s value. Here are tips for getting a positive outcome with the BPO:
Talk to the BPO agent before they evaluate the property. Find out whether the agent knows the area and can make an accurate assessment of the home’s value, based on factors related to the neighborhood, such as average income level and crime rate. If the BPO agent has never been in the area, contact the bank negotiator and ask for a different BPO agent.
Provide quotes for needed repairs. If the house has any type of repair needs – from worn carpet to failed foundation – get quotes for those repairs and provide them to the BPO agent via fax or email, together with any comps that you have done for the house and the neighborhood. Ask the BPO agent how they go about assessing and accounting for the repairs. If the agent says that they won’t consider repairs, tell the bank negotiator you need a different BPO agent.
When speaking with the bank, explain exactly what happened and the information that you provided, and state that you need a BPO agent who will account for necessary repairs in determining the value of the property. (We once had a BPO agent tell us that he came up with a value on the house before he even went to see the property and he wasn’t going to change the report!) In most cases, the bank will be pleased that you have notified them if the BPO agent is not doing appropriate due diligence. They want to get an accurate evaluation, because if the house is overvalued, the short sale will not go through and the house will end up in foreclosure – something the lender wants to avoid.
Document unseen problems. If you are aware of problems that are not readily visible (e.g., water leaks through the foundation, outlets that don’t work, hail damage on the roof), document those issues and bring repair quotes with you when you meet with the BPO agent in person. (Although you can send quotes for cosmetic issues via email or fax, you want to point out hidden issues and structural problems in person to ensure the BPO agent documents the information in their report.) As with other repair needs, hidden issues should be reflected in the BPO agent’s determination of the property’s value.
By providing detailed and accurate information about the house and the neighborhood to inform the report, you can help the BPO reach an accurate conclusion and increase the chances that your short sale will be successful.