I have completed thousandssss of BPO in the past seven years, I can tell you that ever since the market turned around (appreciating) the Banks have demanded from their agents to complete the BPO based on fair market values ONLY and therefore a huge amount of short sales have been falling apart, the short sale "bargains" are not easily found in today's market.
I am not clear on why you had appraisal's done on the property prior to having the seller's lender approve the short sale. Are you by chance the owner of the property in question? The order in which things are done on a short sale are a bit different than a more conventional sales transaction. I will always advise buyers to not have any work done on the part of their lender until the seller's bank has issued the short sale approval, especially given sometimes they do take a while to get completed.
With that said, the bank will send out to have a BPO done on the property. A BPO is a Broker Priced Opinion, done by a realtor, which is similar to an appraisal, but does not always come in at the same value as a true appraisal. As already stated here, appraisals are a bit subjective in nature but do tend to be close in their final values. I have a file now, where the BPO that was done came in about $30k more than the true market value of the property, and clearly the agent that provided the BPO did not know how to properly value a property. Thankfully, the bank realized that something was not right with the BPO and has order an appraisal to be done by a licensed appraiser.
Whether the BPO on the property comes in higher or lower than the contract price, there is always room for negotiation with the bank, so long as your realtor is able to provide the needed information to the lender. While it is a short sale, it is still a purchase transaction that can be renegotiated. Good luck with your transaction.
Lila Lopez CRS, CDPE, e-Pro
RE/MAX Advance Realty
HAHAHA, just kidding, but you are asking the wrong people, we donâ€™t know the circumstances surrounding this proposed deal.
The guys in my office are down the hall arguing about where they are going to lunch today, pales in comparison to getting a lender, seller, lien holders etc. to agree to take a hit. Pass the green beans please.
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
If you are financing, and one or both of the appraisers was commissioned by your lender, then it is likely that the seller's lender will reduce, unless their appraisal comes in higher. If you are paying cash then their determinant will be the value that the BPO yields
Keep in mind appraisals can vary and BPOs as well because they give an opinion of value based on the comparable homes and market. But all should be within the same value range like that of the two appraisals already done.
Also, appraisal value should supersede any BPO.