Short Sales & the Dreaded BPO

Short Sales & the Dreaded BPO

The number of homeowners with adjustable mortagages is mind boggling. It will only get worse over the next several months as we see more and more homeowners begin their foreclosure process. What is unfortunate to the homeowner can be lucrative to the investor during the short sale period.

The short sale can be a win-win-win situation for all parties, if done properly. The homeowner gets out from under their debt, the bank stops the possiblity of more loss and the investor gets a great deal. Unfortunately, as most of you already know, the banks are not discounting all that much. They are trying to recoup as much money as possible. This is where you are going to use your secret weapon! Negotiating the BPO or Broker's Price Opinion.

The BPO order is similar to a comparative market analysis (CMA). When a bank is putting a property in short sale, the bank will either send out an appraiser or a BPO Agent to establish a market price. Generally, the bank will accept an offer between 82-95% of the value indicated by the BPO. You're probably saying, "So what. That's not a lucrative deal!" Here is where knowledge is power comes in.

The majority of banks are bleading money. Therefore, what ever corners they can cut they will. To save monies, banks are using drive-by appraisals. In addition, these appraisals are being done by Realtors. They pay these agents 1/3 of what they would pay a licensed appraiser. Do you think an agent is going to take the time to actually conduct a full walk through evaluation? No way, they're making $75 to $150 an appraisal plus writing a report. They drive up, snap a few shots of the house's exterior and write up their appraisal. That's why it's called a BPO and not an appraisal.

When you submit an offer on a short sale, the bank will immediately want a BPO Agent to go out to the property and do an inside inspection. Note: Sometimes banks will have a licensed appraiser, but in most cases, they will not. This is where your negotiating skills are going to come in. You want to make sure that you meet that BPO Agent at the property during inspection. If you can, you want to get the agent's name and do some research before meeting them. Find out of this agent has done BPO's in the past. Is this person a BPO expert or just an agent looking to make a few extra dollars? Is this a seaonsed agent in general, or a newbie? Do they know the market?

After you do your agent research, you're going to want to bring a few items to your BPO inspection. First, you want to bring a few comps of recently sold real estate. Try to find comps that are in a 1/2 mile radius with similar square footage and bedroom/bathrooms. The reason you're going to do this is because you want to make the agent's job as easy as possible. Remember, they're only making $75, so if they don't have to spend time looking on the computer for comps, they won't.

The second thing you're going to want to bring to the inspection is a RETAIL repair list. Banks don't care if you are going to repair the house yourself or use a contractor. By using your RETAIL repair prices you have more room to negotiate.

Finally, if you know an appraisal was done on the property earlier and the appraisal was low, bring that paperwork. Same thing with previous low-ball offers. You may need the help of a real estate agent for this information.

When you meet with the BPO Agent, establish a rapport. Find out if you can help the agent by sending them some referrals or contacts. Walk through the house with the agent and point out all the things wrong with the house. Give the agent your repair list and the comps you found. Before you leave, get the agent's email.

BPO agents have 2-3 days to get their report into the banks. As soon as you get back to your office, email the agent. Don't mention the appraisal, but make the email friendly. For example, if you discussed a good landscaper, email the informtation to the agent. This does 2 things: 1) your working on your rapport and 2) it gives you another reason to contact the agent again. The following day you can call the agent and ask "Hey Bob, I was just calling to see if you got that landscaper's name I sent through email? How are things? Oh yeah, what do you think the house is going to come in at?"

By taking these steps with a BPO agent, you will hopefully be able to influence that agent to seeing "your price" and not the bank's price. Remember, always offer low, so that you have room to negotiate with the bank. In addition, don't forget to make that connection with the agent. The agent's bread and butter comes from referrals and relationships, not BPO work. An agent will be much more inclined to help out a potential client, or friend, then a bank.

Good luck in your deals...


"For I know the plans I have for you... plans to prosper you and not to harm you, plans to give you hope and future." Jer. 29:11


Great info Kim.

Thank you.



"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)

"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11

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short sales with 3 liens

I am very new to short sales, I have read books and watched videos but have never done one...until a friend came to me and asked what I could do for her. They walked a way frm their home and the home has 3 mortgages on it:
prime Aurora about $202k
2nd GMAC aout $27k
3rd Beneifical about $8700
I have stated the process with Aurora; I called them and faxed over authorization, when I called them to get payoff info they wanted to 1st do the BPO. They had it scheduled for one day but did it on another. I keep calling 2 c what it came in at but they won't return my calls.
How do I start the process with the 2nd & 3rd; I also faxed over auth & financial application to all 3 company's.
The 3rd said they aren't going to waive deficiency.
So what am I misssing cuz I feel overwhelmed, and on another note I cant find an exit.
Please help me with the holes I need to fill.

Hi JC,

Well, first, I am not sure you are submitting a bulletproof short sale package that all lenders require.
When you submit the "authorization to release" form, you must also submit other forms including the purchase and sale contract with the seller, last 2 months of bank statements, last two paystubs, a hardship letter, etc...If you asked the lender what they require and they didn't specify any of this, then i guess you are in luck, but I have never heard of that before.
In regards to the mortgages, the first mortgage always is priority when negotiating a short sale, but all three must approve with what's going on. You must negotiate with all three. Since the third only has 8700 invested, they are not going to see much of a settlement. the same with the second. I would negotiate 250-500 with the third and no more than 1000 with the second. It also depends where you are trying to get the deal based on the ARV.
I know this is a lot of information, but let me know if I can be any clearer.
Good luck,


Nick Walters
Walters Property Investment Group, LLC


I submitted a package that contained:
hardship letter
financial application that the bank required
MLS listing that expired

I didn't have a purchase and sales cause I wanted to know the payoff.
And also The sales contract on Dean's disk was a bit hard for me to fill out.
What contract do you use?

I have pictures, cost of repairs, BPO amt, comps and am working on the net sheet.
Like I said b4 this is my 1st short sale and am still learning as I go. The homeowners are friends and said if we could help them out great but if not atleast we tried.

So my questions are:
how do you fill out a basic contract
do I have to open escrow
and do I need a contract on all mortgages

short sales suck

The short sale that I recently wasted 4 months of my life on and $1200 of my hard earned cash on, was priced at $129k. I bid full price. They do the BPO and it comes back at $160k. They accept my offer 4 months later. The deal fell through because of my inept mortgage agent.

I will persue the property when it comes up in a foreclosure auction. I'll probably buy it for a lot less than the original $129k.

Why investors waste their time with short sales is beyond me! Grrrrrrrrrrrr!

A bidder generally doesn't even speak with the lenders bank so how would they know when a BPO will take place? The sellers realtor does all the contact with them. If you have a contract on a short sale property and are negotiating with the lenders bank yourself... condsider yourself lucky!

I don't have any idea how a potential buyer would even meet a BPO appraiser to negotiate the price of the property??? 9 times out of 10 the BPO is a "drive by". The appraiser doesn't even "drive by". They do it all from their computer chair.

I want to know how you think an investor could possibly sway a BPO appraiser (paid by the bank!) when I couldn't even sway the appraiser that I paid $400 to appraise the property for my mortgage!? You're not paying the BPO appraiser so the liklihood that anything you say to them will have any effect on their appraisal is absolutely zero. Sorry to sound so dismal but it's true. You can't even get the appraiser (whom you just paid $400) to listen to your thoughts on where the value should come in. How are you going to meet and get a BPO appraiser (paid for by the lenders bank!) to listen to you?

I brought printed out comps for the property and gave them to the appraiser that I paid $400 to. He accepted them and probably tossed them out his cars window on the way home. He didn't use my comps even though they were relevant. He used comps from 3-4 miles away... in a compleyely different part of the city! Please folks, don't fool yourself into thinking you can sway an appraisers opinion! You can't.. even if you're the one paying for the damned appraisal.

From what I've heard, the short sale is just as bad on a homeowners credit report as a foreclosure. The homeowner could still be sued for the difference between the short sale price and the amount they owed on the property. Or, the PMI company pays off on the amount missing. It's not pretty either way.

Investors aren't doing anyone a favor by getting involved in a short sale.


Hey Kim,
I have got to say, That is a Beautifully written column(Post) on Short Sales, I posted a Similar Column a couple of months ago, excellent Information about the BPO and how it works....Good Job!

By the way, EVERYHTING that Kim has posted is Absolutley TRUE, Most Realtors DO NOT care about doing BPO's and Most Agents get paid Closer to $50-$100 for most BPO's, this is Exactley why it is crutial for you to meet the Agent at the property(If Possible), Because most agent's aren't even doing walk through's, their just doing "Drive By's" Like Kim Stated. Nice Work! SULLY



While her post was beautifully written...

... everything kim posted is fluff. Pure nonsense.

If anyone here has ever met an appraiser who was doing a BPO ...that was paid for by the lenders bank AND they had any positive effect on the appraisal... I'd really like to hear about it.

The bidder is not paying for the BPO. They generally don't even know when the BPO will take place or who will be doing it. Nevermind, meeting the appraiser, giving them your ideas of the propertys value and having it effect their apraisal positively.

It's just not reality.

Easy There Don....

Yeah Don, Well I'm going to have to go ahead and Disagree with you on that one there buddy, It really dosen't matter if the Bidder is paying for the BPO or NOT, If you Meet the Agent at the property and show where your coming from and it makes sense, then it VERY WELL could have an Impact. As for an Appraiser going out to do a BPO,I've NEVER Seen it, It's always been Realtor's in my experience's.....It's just Reality, SULLY



Thank you Sully!

Wow, who knew my post could create so much controversy. I think the key here is that we are not dealing with appraisers. We are dealing with real estate agents who don't care what the property sells for. They simply want to get the job done with the least amount of effort put forth and get paid. My friend is a realtor. We sat down together and when she logged into her mls, announcements were on her homepage. The announcement stated "Earn extra money! Now is the time to do BPO's! Let your local RE group train you for $25." Now, you think for a $25 training the RE agents are going to put all their time into doing proper BPO's? I don't think so.



the BPO appraiser doesn't care where the buyer is coming from. They're not being paid by the buyer.

Like I said, most appraisers won't listen to the buyer no matter what... even if the buyer is paying them. Maybe back in 2000 to 2004 a buyer could twist the arm of an appraiser IF they were paying him/her. In these days of tight lending practices, the appraisers are covering their A$$ and only making the appraisal come in slightly above the offer and more likely coming in right at the offer.

Again, I'd love to hear from an investor doing a short sale who A.- found out when the BPO was taking place, B.- met the BPO appraiser... and then C. - felt that they actually influenced that appraiser in their favor.

It'll never happen. Sorry to seem negative but it is the truth.