As of early 2011 I have completed over 3000 BPOs for various lenders out here in the Phoenix area and the main question so many real estate agents & homeowners ask me is “Why did the BPO (home valuation – broker price opinion) on my short sale come in so high?”.
Here is what I commonly see in the Phoenix area.
In most neighborhoods in the Phoenix area, when you look at all of the comparable homes (active, pending and sold) in the subdivision or neighborhood, most of the time you will see the values break out into 2 or 3 very distinct price points.
This typically applies to areas where homes are at least 10 years old or more.
As you look at the comparable homes in your area, you will notice that the homes that need a lot of repairs fall into the low price point, average homes, maybe even with a few updates or improvements, fall into the middle range, and the freshly remodeled homes are at the top.
One thing you have to know about how your lender sees your home and the homes of others during a short sale: All homes need paint and carpet!
What does this mean?
It means you can’t expect your lender to give the value of your home a huge discount because your carpet is worn or very dirty or because your home needs paint.
If your home is in average condition, but needs paint and carpet, you can expect your home’s valuation to most likely come in around the middle of the average home prices.
If your average price point has a range of $30,000 from the bottom of the average to the top, then you can see there is a very strong possibility your valuation report might come in $15,000 higher than you anticipated. You can’t immediately assume your home should be placed at the bottom of the price point because your home needs minor repairs like these.
If you are in an area where current home values are around $100,000 for an average decent condition home for example, you can’t expect the valuation to come in at $85,000 or $90,000 just because the home needs paint and carpet.
If the offer on your short sale is $85,000, and the BPO comes in at $100,000 you have a very slim chance of the lender accepting less then about $95,000.
Your best bet is to clean the carpet and even do some paint touch-up to increase the appeal of the home and continue showings to attract a better offer.
There is a huge myth going around that the messier and more trashed the home, the more discount the lender will give.
Take it from me this is absolutely false! In fact, I believe this makes the lender want to foreclose even more!
If you are short selling a home and the seller left a huge mess, the yard has 3 foot weeds and the pool looks like a toilet, you can expect them to “lose” your file and give you the run around until they can complete the foreclosure.
Now you know!
Related posts:
- Does my bank really want my house? Part #2 – Short Sales
- My Book: The Real Estate Agent’s Guide To Using The Equator Short Sale Website – Now at Amazon
- Do I have to be financially distressed to do a short sale?
- Phoenix Metro Area Price Range Statistics for March 6th 2011
- Phoenix Area – HUD Home Auction – March 26th, 2011
Tags: bpos, broker price opinion, home valuation, home values, lenders, real estate agents, short sale, short sales, valuation report
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