Working the BPO


Before your short sale is concluded, the lender will require a Broker Price Opinion (BPO) from a broker with whom the lender does business.  This BPO is often a sticky point in short sale negotiations.  Many real estate companies are now pushing for legislation to make short sales even more transparent by requiring a copy of the BPO to be submitted to the seller and the buyer.

 

A disturbing trend occurs when the lender is actually an active REO participant.  They may not be sincere in allowing a short sale and may actually prefer to foreclose.  The reason is that they believe their internal system will generate a bigger return.  In this case, the lender is not interested in the seller’s release of liability through a short sale.

 

It is no secret that some brokers are influenced by certain lenders.  The lender can argue with any price opinion and accept or reject the opinion.  The higher the BPO, the less loss the lender will take.

 

This fact makes it imperative for the investor to have performed their own BPO.  Short sales are about negotiations.  If you have the facts, you can persevere and most likely bring the lender around.  If you know your price is below market value, just accept the fact that it was a shot in the dark and move on.  But, if you can support your offering price with local, comparable sales, you and your seller have the ammunition to fight back.

 

The seller, who will be left with the scars of the lender’s foreclosure, is entitled to an explanation.  If there is an agent involved, encourage the agent to question the lender.  If there is no agent, contact the lender yourself and pursue a meeting. 

 

Impress the lender with your thoroughness and make sure the lender understands this short sale will happen in a timely, smooth manner.  Your ability to impress the lender with your credentials is imperative and could well swing the deal. 

 

 

 

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