Selling your house during the pandemic!!

1. Selling your house during the pandemic!! BPO stands for broker price opinion of value. The BPO is a type of real estate appraisal. Real estate brokers prepare BPOs for clients, usually lenders, who need to determine a property’s current market value. When Used Banks and other lenders must determine a property’s value for a variety of transactions. Uses include new loans, foreclosures and short sales. The lender needs an expert to establish the value of collateral for the transaction. BPOs in Short Sales In a short sale, the lender has already made a loan. The original loan included an appraisal that supported the loan amount. When a sale will result in full payment, a lender has no use for an updated appraisal. Before agreeing to release its lien without full payment of the debt, the bank needs to know for what amount the real estate should sell under current market conditions to mitigate potential losses. Banks use the BPOs to assess the reasonableness of offers submitted on the short sale of a home. Who Prepares BPOs As the term implies, real estate agents prepare broker price opinions. The agent doing the BPO might not be licensed as a broker, but will at least hold a real estate salesperson’s license. Real estate appraisers also prepare real estate appraisals, but they do not require a real estate license to work in that profession. Appraisers generally have separate licensing requirements from real estate brokers in most states. BPO Process The real estate professional preparing the BPO conducts an on-site inspection of the property similar to any other appraisal. Brokers research recent sales of similar properties in the area, sales trends and other market data to estimate the home’s current value. My bank is sending someone over for a BPO. What should I do? The Broker’s Price Opinion (BPO) is perhaps the most critical step in the short sale approval process. A BPO is the bank’s field review of the property to determine the basis for its value. A lender will typically approve a mortgage payoff that is a predetermined percentage of the BPO value. For example, a lender might only allow a payoff of no less than 84 percent of the value established in the BPO report. In other words, if the BPO states that the property is worth $100,000, then the lender might expect to receive no less than $84,000. That does not mean the lender would approve a sale price of $84,000. Adding realty commission, closing costs, and property taxes on top of that, it is feasible the lender would accept a sale price of $92,000 or higher. So, if the Agreement of Sale price is $105,000 and the BPO values the property at $100,000, the bank will be eager to approve a short sale at $105,000. If the BPO values the property at $100,000 but the price in the Agreement of Sale is $60,000, the bank will likely reject that sale price. Therefore, it is important that the BPO valuation be reasonably close to the sale price. The lender often uses hires a real estate agent from the area to perform the valuation. In some cases, the agent may not be

2. from the area. In some cases, the agent may not be aware that the property is a short sale. In some situations, the bank will pay for an appraiser to conduct an appraisal, but the lender may still refer to the report as a BPO. A short sale seller does not need to tidy up the house for the BPO agent. The seller does not need to leave the house, as this is not a normal showing with a buyer. The BPO agent will take exterior photos and in most cases, interior photos. The seller, or the listing agent, should point out the defects and necessary repairs for inclusion in the report that goes to the bank. The BPO agent should be informed that this is a short sale situation. The cause of the hardship should be conveyed. It is okay to give a few comparable sales to the BPO agent, and many will appreciate that gesture as it can save them time in preparing the report. Someone should tell the BPO agent the sale price. The objective is to inform the BPO agent of the circumstances of the sale, with the hope that their valuation will be in line with the sale price. If the BPO valuation is close to the sale price, then the bank is far more likely to approve the short sale. http://www.venusianmgmtgroup.com