Four Steps to Successfully Influence a BPO and Cash Out On Your Short Sale
So you have successfully landed a short sale deal and you have dollar signs flowing through your mind. You are on your way to closing a potentially profitable real estate investment however you have an obstacle you must overcome. You need to have a successful BPO performed in your favor. The BPO is a process in which a mortgage company hires a third party to perform a valuation of a property to use as grounds for acceptance or denial of a short sale offer. This is typically performed by a real estate agent, a real estate broker, or an appraiser. Sometimes an appraiser will perform a complete appraisal report. A local agent will physically come out to the property you are offering to purchase from the bank.
Step 1. Make sure the bank orders an interior BPO. Some mortgage companies may send someone out to do a “drive-by” report. This usually never works in your favor. Most short sale properties need interior repairs, therefore they need an interior BPO to pinpoint an accurate value. Step 2. Physically meet the agent at the property. How can you try to influence a BPO if you are not there? They may not even know the details as to why they are performing the valuation. If you are there you can explain the situation.
Step 3. Explain the deal. As soon as the agent steps out of their car, I strike up a conversation with them and tell them why I am there and what I am doing. For example: Once we introduce ourselves and walk inside the house I inform them that the homeowner has fallen behind on mortgage payments and was having difficulty selling the house (If the house was listed for sale I will bring a copy of the MLS sheet showing how long the house has been active on the market). I then say that there has recently been an offer submitted on the house so the bank had you come out to determine if the offer was acceptable.
Step 4. If you have knowledge about repairs the house needs, point them out to the agent. If you have repair estimates, bring them along as well. This will help support your offer. Not every agent can decipher whether or not a furnace or water heater needs replacing, or that there is a structural defect with the roof or foundation. Help them understand, they will notate it in there report. The bank cannot physically inspect the house therefore the BPO agent is your best chance to help the bank understand that the condition of the house reflects the amount of your offer.
By explaining all of this, you have informed them of the emotional situation the homeowner is going through. Essentially you are trying to get the BPO agent to understand your deal. I have worked with many agents who have actually asked me what my offer is and they inform me right there that my offer is fair and there value is going to be very close to it. At this point I have hit a homerun. I have gotten the agent to understand my position as well as the homeowners position. Once the BPO is a success, it is time to move on to negotiating with the bank.
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