When preparing a short sale package on behalf of a homeowner to be presented to the mortgage company, the real estate agent, representing the homeowner, should include a Comparative Market Analysis (CMA) in an attempt to get the lender‘s loss mitigator ‘on the same page’ in regard to the current market value of the home. Although this can be helpful, it is not what is used by the lender to determine the value of the property.
Lenders Use One of Two Ways to Determine Value
Lenders use one of two ways to determine value on a short sale transaction; an Appraisal or a BPO. A BPO is a Broker’s Price Opinion and this is acquired by the lender through a licensed real estate agent who is paid a fee to prepare the BPO. In most cases, these agents prepare many BPOs for multiple banks.
How is a BPO Derived?
The real estate agent is usually required to visit the property and present three active listings and three sold listings from within the past 60 to 90 days as comparables. These listings are used to determine the current value of the subject property.
What Can my Agent do?
Unfortunately, the agent representing the homeowner has little impact on the result of the BPO. However, there are several steps your agent can take to ensure the best possible outcome and to ensure the BPO Agent is armed with important information regarding your home. First, the agent can insist on being present to let the BPO agent into the home. This would allow for a brief discussion about important aspects of the home. Secondly, your agent can provide, for the BPO Agent, a copy of the CMA completed for the short sale package by your agent. This would help to ensure the BPO agent considers the same comparable properties on the BPO as on the CMA.