TOR 003: How Does The Bank Decide The Value Of A Short Sale?

value

Top Orlando Realtors Podcast Episode:003

Diego Fontana in the BVL area of Kissimmee asks…”How do they decide the value of a Short Sale property“? The valuation of a property, in my opinion, is the single most important factor in the whole short sale process.


Here’s the way it works. We start by submitting an offer to the bank, the bank will then order what’s called a BPO on the house AKA a broker’s price opinion. In some cases, the bank orders a full-on appraisal, but most of the time it’s going to be a BPO
The person that does the BPO is usually a local realtor hired by an agency that’s been hired by the bank.


So the realtor goes out to the property, takes some pictures, and does some research. then based on things like
• recent sales in the area
• repairs that the home needs
• and even upgrades that the house may have

marketing


They take all these things into account to create the BPO report. So this is the realtor’s opinion of what the property’s worth.


Whatever, the BPO comes in at will be the negotiating point between the lender and potential buyer.
The BPO happens…
Now At this point, there are 3 things that can happen that will dictate what follows.
The BPO comes in at a fair valuation, everyone’s happy, and we proceed to close.
or…
The BPO comes in really low, so low in fact.. that the bank insists on another one being done… and although it doesn’t happen too often, it can and does happen on occasion.
or…
The BPO comes in super high and the buyer threatens to walk.


When this happens, the Orlando listing agent has to Do whatever it takes to get the bank to order a second BPO. We do this by making a report of our own… called a CMA or comparative market analysis
This report has even more information than a BPO does.


The sole purpose behind sending them a CMA is to get the bank to order another BPO or if we’re lucky they’ll just use our report.
In the end, after all the dust settles, the lenders are the ones that decide how much they are willing to accept for the property.


So Diego, there you have it. I hope that answers your question.


That’s our show for this week, join us next week for the 3rd episode in our short sale series.

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