Home Buying in Miami>Question Details

Timothy, Home Buyer in Dallas, TX

Purchasing a shortsale. Had 2 apprasials done came in at $145,000 and the other for $150,000. Shortsale bank sending their bpo out today. What are?

Asked by Timothy, Dallas, TX Fri Sep 13, 2013

the odds the banks bpo will match the apprasial price? Home was priced at $170,000.

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A BPO is a Broker Price Opinion, it is completed by a Real Estate Professional. If you ordered the appraisals of course the Bank is going to have an agent which they typically rely on to offer an opinion of value based on fair market sales in the immediate area as the Banks are aware that an independent property appraiser will be sensible to the contract price.

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.
1 vote Thank Flag Link Fri Sep 13, 2013
Good Morning Timothy,

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
1 vote Thank Flag Link Fri Sep 13, 2013
If you hired and paid for an appraiser to appraise the property, consider that simply for your own records. The short sale lender will be relying on their BPO when it comes to valuation of the property. However, if there is a large margin of difference from your original accepted offer price to the BPO, you can contest and see if the bank will adjust accordingly or send another appraiser to the property. Keep in mind that there are no guarantees that this will happen, but in any case, it doesn't hurt to ask.
1 vote Thank Flag Link Fri Sep 13, 2013
You left out the most important piece of the puzzle, how much over $170,000 did you offer?

HAHAHA, just kidding, but you are asking the wrong people, we don’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.

Jim Simms
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.
Web Reference: http://jamessimms.com/
1 vote Thank Flag Link Fri Sep 13, 2013
If you are buying with financing, them you can send your bank appraisal to the short sale lender and they maybe lower until your bank appraisal.
1 vote Thank Flag Link Fri Sep 13, 2013
The bank holding the note will commission their own appraisals. If you paid for appraisals, it was probably a waste of your money. No lender will accept or even review a seller-commissioned appraisal to determine value. They rarely respect the listing agent's opinion of value. The BPO could be an opinion of value given by an independent Realtor or it could be a full-blown appraisal.

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
1 vote Thank Flag Link Fri Sep 13, 2013
Who paid for the appraisals? You or them? To ask for a BPO after two full appraisals is bizarre unless you paid for them and if they are months old. If the appraisals were done correctly the BPO should be close. I have always said if you get 4 appraisals you would have 4 different numbers and you half way proved it. Appraisals are educated guesses.
1 vote Thank Flag Link Fri Sep 13, 2013
BPO's are not done by Realtors with very little experience. I have done BPO's for several years and have been in the business for 11 years. To qualify to do a BPO usually requires an application with your experience and expertise. Don't think that BPO's hold much value because they do; otherwise the lenders wouldn't be asking for them. BPO's use the same criteria that an appraiser will use and lenders are pretty strict on what you base your opinion on.
0 votes Thank Flag Link Thu Sep 19, 2013
Well BPOs are mostly conducted by Realtors with very little experience, so it is always a mystery. Any chance your agent can meet the BPO agent at the property with the appraisal reports?
0 votes Thank Flag Link Thu Sep 19, 2013
Given the details provided, it seems likely that the BPO will come in close to the appraised values, however, the BPO is an opinion of value... The short sale lender may consider the appraisals, but are not obligated to. Even if the "value" is $150k, they can still require more money - they may not get it, but they are already taking a loss so it is up to them.
0 votes Thank Flag Link Wed Sep 18, 2013
If all was done correctly then the BPO will comeback more or less in line with the appraisal value.

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.

Good luck..
0 votes Thank Flag Link Wed Sep 18, 2013
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