Home Buying in 60608>Question Details

A.M,  in Chicago, IL

BPO higher than Appraisal on Short Sale

Asked by A.M, Chicago, IL Fri Mar 8, 2013

The house i am trying to purchase in a short sale has come in with a 120k BPO I am buying on FHA 3.5% down, but my appraisal just came back at 91k what will most likely happen in this market? I do not have the money to cover the difference. Does Chase normally give into the appraisal value? or should I expect to have to walk away from a deal that i have been trying to close since 07/2012. Thanks! BTW Chase was originally looking for 95 and I came in at 85 which then caused them to request a BPO that brought them back at 120K

Help the community by answering this question:


Most of the answers here are good, but there's one thing that NO ONE is mentioning. When you have an FHA appraisal done, THAT FHA APPRAISAL "STICKS" TO THE HOUSE FOR 6 MONTHS. This means that if you drop out, NO ONE ELSE WILL BE ABLE TO BUY IT WITH AN FHA LOAN FOR ANY MORE THAN THAT.

Make sure the seller's representative knows that. This should strengthen your position.


Matt Bukovy
Senior Mortgage Consultant
Web Reference: http://www.mattbukovy.com
2 votes Thank Flag Link Fri Mar 8, 2013
No one can predict what Chase or any of hte A hole REO banks might do. The Feds(us taxpayers) are subsudising them so they do not care.
Your lender is who matters. They will only lend based on the appraisal, not any BPO. If Chase wants 120K then you need to walk away.
1 vote Thank Flag Link Fri Mar 8, 2013
The BPO means nothing to your lender and all their going to loan you money on is the appraisal at $91,000. In addition because it's an FHA appraisal it's married to the house for 6 months and so if the lender doesn't make the deal with you their going to be unable to sell the house to anyone else needing either an FHA or VA loan for 6 months. My advice is that you and your buyer broker (hopefully you have one) leverage this to your advantage and insist that the contract price get reduced to $91,000.

Good luck.
0 votes Thank Flag Link Tue Dec 10, 2013
Based on the information provided, one could speculate that Chase isn't "playing fair." As the buyer, I would certainly place more faith in the appraisal than the lender's BPO and wouldn't pay one penny more than 91k.

0 votes Thank Flag Link Tue Dec 10, 2013
You are not going to buy it for much less than the BPO amount. Short sales are not fair , walk away or pay more.
0 votes Thank Flag Link Mon Dec 9, 2013
Well, the BPO was probably done in 7/12 or before and now the appraisal is being done almost a year later. Comps change in a year! Short sales are very stressful for all, and buyers need to be prepared for a long journey to a closing, if at all.
0 votes Thank Flag Link Mon Dec 9, 2013
The new high current BPO can really throw a monkey wrench into the plan to buy at last years prices. Many short sales are falling apart because of this. Submit the appraisal to the listing agent and hope for the best. Chase does not have to do anything.
0 votes Thank Flag Link Tue Mar 26, 2013
The only thing that counts is the appraisal. Your agent should approach the listing agent with the appraisal and include some additional comps requesting the reduce the price to the appraised value.
0 votes Thank Flag Link Tue Mar 26, 2013
I do appraisals for Chase Home Finance. BPOs are usually incorrect and performed by realtors that are unable to obtain sales work. However, there are bad appraisals out there too. Look at the appraisal and see if there are large variances in prices (sales price, adjustments). Ideally shouldn't be more than 10%, and never should occur without an explanation. Adjustments for site, and date usually indicate a bad appraisal. However please do not misconstrue by advice as only a qualified professional can truly determine this, just trying to help you identify a potentially bad appraisal.
0 votes Thank Flag Link Sat Mar 9, 2013
Have your Realtor/Attorney/Lender present the Appraisal info to the seller's representatives. An appraisal is more valid than a BPO.
0 votes Thank Flag Link Fri Mar 8, 2013
BPO's are always all over the place. Just how they are.
0 votes Thank Flag Link Fri Mar 8, 2013
Matt has a very good point. This should be a strong point with which to negotiate - make sure your Realtor or attorney is aware of that fact!
0 votes Thank Flag Link Fri Mar 8, 2013
I agree with most of the previous posters. There is no way to foretell what Chase will do in this situation. Sometimes it comes down to who your negotiator is, but in any event, it is critical that your Realtor or attorney provide Chase with the appraisal. You should have the opportunity to appeal the valuation, but ultimately, there is no telling what will happen. The key is to stay in constant communication with your negotiator, and help them help you.
0 votes Thank Flag Link Fri Mar 8, 2013
What I would do if I were in your shoes and I wanted the property and I qualified, I would re-submit an offer for $91,000 along with the appraisal. There are no guarantees but it would be my only shot at getting the property.

You already paid for the appraisal and invested so much time into the process you might as well use it. I have had a situation happen before - half the time they agreed based on the appraised value and the other half they stuck to their BPO price. The only thing you have to lose is more time.

Good luck! Eric
0 votes Thank Flag Link Fri Mar 8, 2013
BPOs are a guess, and have little value, unless you are the one using them to justify value. As others have said, get the appraisal to the negotiator. No one knows what Chase will do, let's hope you have someone working your file who understands the market. good luck.
0 votes Thank Flag Link Fri Mar 8, 2013
In this market place my advice is to walk away. I would never pay the difference if Chase is being difficult. People need to not get emotionally attached to one property. There are many available for purchase. Thanks for the question
0 votes Thank Flag Link Fri Mar 8, 2013
I am not sure everyone below understands the question, it does not sound to me like they do. Your offer is at $85k and the bank wanted $95k so they did a BPO and an appraisal which came back at $91k and $120k for the BPO. BPO's are not as professional as an appraisal so they have more weight. It sounds like the bank was trying to get the value of the property with a BPO and since the 2 are far apart they might order another BPO to see what that one comes in at. I am guessing you lender did the appraisal, make sure the bank that has the current loan sees it.
0 votes Thank Flag Link Fri Mar 8, 2013
forward the appraisal to the short sale negotiator, they may come down they may not.
0 votes Thank Flag Link Fri Mar 8, 2013
0 votes Thank Flag Link Fri Mar 8, 2013
Hi A.M,

Have your Realtor submit an Addendum to the listing agent to lower the price to the appraised value and have them submit the appraisal with the Addendum. Since it appraised lower, they may lower the price. They need to see the appraisal though.

Good luck.

Shanna Rogers
SR Realty
0 votes Thank Flag Link Fri Mar 8, 2013
Make sure you forward your appraisal to the negotiator (or have listig broker or seller lawyer do it).
0 votes Thank Flag Link Fri Mar 8, 2013
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