If you have not downloaded my latest report on the 7 Deadly Sins of Short Sales, stop right now and make sure you download immediately and READ it in its entirety! I will save your short sale life.

This post is an excerpt from my report and identifies the sin that is the no.1 killer of short sales in the nation:  Not managing the BPO/Appraisal appointment.  This is a huge and grossly neglected area in the vast majority of short sales, and I can’t begin to stress how critically important it is that you DO NOT COMMIT THIS SIN.  If you commit all of the other sins you may get by for a while.  But this one will take your deals out in a hurry.  This short sale SIN is the leading cause of death for 77% of the nation’s short sales, (according to the Huffington Post 77% of the nations short sales are failing), so listen up good.

One of the most important parts of my business is managing the BPO/appraisal appointment.  My primary goal is to ensure that the value comes out as low as possible.  Why?  Because this value is the principal determinant of whether a homeowner gets foreclosed upon or the lender approves a short sale offer on the property. If the BPO comes in TOO HIGH the bank will think that the property is worth more than what it really is, and therefore will not consider a reasonable offer on the property.  For example, if you have a contract pending for 250K and it took you 4 months to get that contract, then your BPO comes in at 350K because the BPO agent saw comps in the MLS selling for 350K 6 months ago…guess what?  Your deal just got killed.  250K is what the market will bear for the home but the BPO of 350K is what the bank will use to determine value.

So, under no circumstances do you ever, I mean ever, let the BPO agent into the property without you or a member of your staff/team being there to meet him or her.  Why you might say? Well, it is because we want to make their job easier (I am being real about this).  Let’s first understand that the average BPO agent is getting paid $50-75 bucks to do the BPO on your short sale.  They need to get in and get out in fast in order to justify the small compensation they are getting to do the BPO.  The average BPO agent is a realtor that is no longer selling real estate actively (if they were they would not be doing BPOs for a living) therefore their representation of what the market is really doing,  is going to be distorted at best.  The BPO agent could really care less about you, your seller, or the contract you have pending.  They are there to get in and out.  So with this knowledge you must make the BPO agent’s job easy!  Do you remember item no.10 on the short sale package above? If not go back and look and you will find that it is your own internal BPO.  You will give the BPO agent a copy of the BPO that you submitted to the lender. It will contain the following:

• Copy of Hardship Letter
• Copy of Sales contract
• Copy of Repairs Needed (if applicable)
• 3 Lowest Active Comps
• 3 Lowest Pending Comps
• 3 Lowest Sold Comps

Don’t expect the BPO agent to understand that you’re doing them a favor at first!  At first glance it will look your holding them up, BUT afterward they will see that you have done all of their homework for them and more importantly you have painted an accurate picture of what is REALLY going on in the market, and with your client’s property.  This will ensure that the BPO comes in at what the market will bear and, it will give the bank a realistic snapshot of what they can expect to receive if they take the home back as an REO.  I could write on this forever, but you should get the point by now.  If not, call me and we will discuss it further.

Aubrey Kipp, Investor
OrlandoShortSale.TV