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Broker Price Opinion (Video) | Asheville Real Estate

Steve Wilde | 1179 Views | 01/21/2015

Welcome back to Short Sales Gone Wilde, with an E. What we’re going to talk about today is the Broker Price Opinion, the BPO, the most important step in a short sale, and also the weakest link. The BPO – the Broker Price Opinion – arguably the most important step in a short sale. Why? This is our only conversation about price in the entire short sale process.

Importance of Broker Price Opinion

The person that comes to the door, it’s either going to be a broker price opinion or it’s going to be an appraiser, that’s our only conversation. So if this person gets it wrong and comes in with a value too high, it’s got to go to the investor for a value challenge. Our negotiator can’t change it. Now don’t get me wrong. There are some real estate agents that do a fantastic job. They put a lot of time and energy into it, pull the comps, walk through the property, and they do a great job valuing the property. But then again, there are some that don’t. They’re only making $75. They want to do a Zestimate and a drive by, and it’s usually going to come in high. So you always want to plan for the worst. You always want to plan for the person that’s going to do a Zestimate and a drive by. So we have to protect that. We have to make sure that they do a good job.

How? Easy. Show up. First of all, take the lockbox off. Then make sure that you show up prepared at the BPO. If you’re a listing agent and you don’t want to go to the BPO, then you really shouldn’t do a short sale. It’s that important. It is the most important step. You’ve got to show up prepared. What does that mean? You have to have comps. You have to have listing history, showing history, and if condition is an issue – so if you’ve got one of the Big Five: a roof leak, foundation issue, HVAC, mold, or water damage – well, then, you’ve got to prove it. You’ve got to have a home inspection showing that there is some damage, and then you have to have estimates. Why? Well, our BPO agent or even an appraiser cannot make the jump between market price supported by the comps and what the value would be because of a roof leak, or a foundation issue. They are not contractors. So you have to do that work for them. You have to give it to them.

Now some agents have told me, I can’t go to the BPO. I can’t give them any information. That’s not true. The Freddie Mac guidelines allow you to give the BPO agent or the appraiser information. You just can’t give them misleading information, improper comps. You can’t negatively stage the property. You can’t throw trash around, not cut the grass. You can’t give them estimates that are overblown. So it has to be real, and you can give them real information. And they need that sometimes. They need to know that this neighborhood that we’re in is not the same as the neighborhood up the street with all brand new houses. You can take them down to the basement, and you can show them the mold. Here’s the HEPA mask. Come on. You’re going to love this. Come on. Now this is going to be– You need to show them what’s going on in the house. Let’s go look at the hole in the roof.   So it’s your job to walk them through and show them the real condition of the property, and why we have a market price offer right here. We have a market price offer. Let me prove it to you. So that’s how you handle a BPO.

Value Challenge

Well, there’s only one thing they can do, and it’s called a value challenge. A value challenge, that’s where you have to put all the comps and all this document together, and it doesn’t go to our negotiator – because remember, our negotiator can’t negotiate on price – it goes to the owner of the note: Fannie Mae, Freddie Mac, the investor. They get to determine, and this usually takes four to six weeks, and it’s successful less than half the time if you’re right and you have all the documents. So if your strategy is to throw a lowball offer in at the bank, get a reaction, and then argue the point, it’s a terrible, terrible, terrible strategy.

So the best thing to do: Start with a market price offer, and then support it. Show up at the BPO. Show up prepared at the BPO. Remember, comps, listing history, showing history, and then a home inspection and estimates, if there’s condition.  With that, your odds are going to be through the roof. It’s downhill from here, honestly. You get past this, and you show you have a market price offer, it’s just a matter of time before you go into closing. Short Sales Gone Wild! I tell you, it’s great! Because in Scotland, we throw logs and stuff, and that’s pretty wild, Short Sales Gone Wild. I do have a thought, but I think it’s best expressed Bollywood style.  Wilde with a E. Indeed. My apologies. Going Wilde? Great, got to love it!

By: Steve Wilde

Broker Price Opinion (Video) | Asheville Real Estate

Welcome back to Short Sales Gone Wilde, with an E. What we’re going to talk about today is the Broker Price Opinion, the BPO, the most important step in a short sale, and also the weakest link. The BPO – the Broker Price Opinion – arguably the most important step in a short sale. Why? This is our only conversation about price in the entire short sale process.

Importance of Broker Price Opinion

The person that comes to the door, it’s either going to be a broker price opinion or it’s going to be an appraiser, that’s our only conversation. So if this person gets it wrong and comes in with a value too high, it’s got to go to the investor for a value challenge. Our negotiator can’t change it. Now don’t get me wrong. There are some real estate agents that do a fantastic job. They put a lot of time and energy into it, pull the comps, walk through the property, and they do a great job valuing the property. But then again, there are some that don’t. They’re only making $75. They want to do a Zestimate and a drive by, and it’s usually going to come in high. So you always want to plan for the worst. You always want to plan for the person that’s going to do a Zestimate and a drive by. So we have to protect that. We have to make sure that they do a good job.

How? Easy. Show up. First of all, take the lockbox off. Then make sure that you show up prepared at the BPO. If you’re a listing agent and you don’t want to go to the BPO, then you really shouldn’t do a short sale. It’s that important. It is the most important step. You’ve got to show up prepared. What does that mean? You have to have comps. You have to have listing history, showing history, and if condition is an issue – so if you’ve got one of the Big Five: a roof leak, foundation issue, HVAC, mold, or water damage – well, then, you’ve got to prove it. You’ve got to have a home inspection showing that there is some damage, and then you have to have estimates. Why? Well, our BPO agent or even an appraiser cannot make the jump between market price supported by the comps and what the value would be because of a roof leak, or a foundation issue. They are not contractors. So you have to do that work for them. You have to give it to them.

Now some agents have told me, I can’t go to the BPO. I can’t give them any information. That’s not true. The Freddie Mac guidelines allow you to give the BPO agent or the appraiser information. You just can’t give them misleading information, improper comps. You can’t negatively stage the property. You can’t throw trash around, not cut the grass. You can’t give them estimates that are overblown. So it has to be real, and you can give them real information. And they need that sometimes. They need to know that this neighborhood that we’re in is not the same as the neighborhood up the street with all brand new houses. You can take them down to the basement, and you can show them the mold. Here’s the HEPA mask. Come on. You’re going to love this. Come on. Now this is going to be– You need to show them what’s going on in the house. Let’s go look at the hole in the roof.   So it’s your job to walk them through and show them the real condition of the property, and why we have a market price offer right here. We have a market price offer. Let me prove it to you. So that’s how you handle a BPO.

Value Challenge

Well, there’s only one thing they can do, and it’s called a value challenge. A value challenge, that’s where you have to put all the comps and all this document together, and it doesn’t go to our negotiator – because remember, our negotiator can’t negotiate on price – it goes to the owner of the note: Fannie Mae, Freddie Mac, the investor. They get to determine, and this usually takes four to six weeks, and it’s successful less than half the time if you’re right and you have all the documents. So if your strategy is to throw a lowball offer in at the bank, get a reaction, and then argue the point, it’s a terrible, terrible, terrible strategy.

So the best thing to do: Start with a market price offer, and then support it. Show up at the BPO. Show up prepared at the BPO. Remember, comps, listing history, showing history, and then a home inspection and estimates, if there’s condition.  With that, your odds are going to be through the roof. It’s downhill from here, honestly. You get past this, and you show you have a market price offer, it’s just a matter of time before you go into closing. Short Sales Gone Wild! I tell you, it’s great! Because in Scotland, we throw logs and stuff, and that’s pretty wild, Short Sales Gone Wild. I do have a thought, but I think it’s best expressed Bollywood style.  Wilde with a E. Indeed. My apologies. Going Wilde? Great, got to love it!

By: Steve Wilde