Bpo Bank Of America - Seven Mistakes to Avoid As a Buyer When Buying Short Sales

Bpo Bank Of America

Bpo Bank Of America

Short sales have become an everyday term of our lives in the last two years. I bet many of us haven't even heard this term 7-10 years ago, but now it's as common as a burger or plasma TV. A "short sale" means in simple terms that the bank is willing to take less than what the bank is owed by the homeowner and allows to sell the property in order for the homeowner to avoid a foreclosure and a trustee sale. The banks are doing it not because they all became so grateful to the tax payers for bailing them out in the course of this financial crisis, but because of a pragmatic "lesser of two evils" calculation that figures that it will cost the bank less to write off a portion of the loan as a result of the short sale than the cost of a foreclosing, holding the asset and then eventual disposing of the asset (i.e. property) at a later date. Plus, in today's market, especially after the infamous stress tests that the Feds put many banks through, they really need to show liquidity, i.e. as much liquid cash in the bank as possible, because if they don't, the Feds may require them to take more TARP money, which comes with a magnifying glass over the bank's payroll, or might end up on FDIC "near-dead" list?. Bpo Bank Of America

Many buyers shun away from short sales though. They got so much bad publicity that many buyers and many real estate agents don't even want to put an offer on a property offered as a short sale. Most people think that short sales are endless mazes that will lock the buyers into contracts and after hanging in there for the next eight months, the buyer will not get the property at the original price anyway. Some of these fears are true. Many are true because of the ways banks handle the process, though some are true because of the incompetence of the agents handling short sales. But we are not here to blame anybody, we are here only to explore what you as the buyer should and shouldn't do in order to stay sane and eventually achieve your Goal: buy your dream home at the price you can afford. So here we go, our seven lessons of short sales:

1. Don't expect the banks to give the houses away.

Yes, the banks don't want to take this inventory on their books, but they also don't want to lose their shirt completely and they have to work within their internal guidelines. Making super aggressive lowball offers on short sales doesn't always get you even a serious look from the lender. You can expect a discount of 5-10% off the market value of the property depending on the status of the foreclosure process and the condition of the property, but anything beyond that number will make the bank indifferent to your offer and will make them think that they can get more money by finishing the foreclosure process and then reselling the house as an REO. You can start with a lowball offer, but then be prepared to up your offer if the bank says no. Bpo Bank Of America

When the bank starts a short sale process approval, the bank will order a so-called BPO - Broker Price Opinion from a local realtor. It's a mini-appraisal that states the opinion of that realtor of the condition of the property, comps in the area and fair market value of the property as is and as a 30 day "fire sale" value. Most agents today shun away from doing BPO's, because it's a lot of work for a meager $40 that the banks pay for BPO's on average. (Side note: I don't believe the banks are really serious about this whole foreclosure crisis because if they were, they would be investing more serious money into the process. For example, they would probably pay more for better qualify more accurate BPO's, even if they had to recoup this higher fee through escrow. They would also hire and train much better negotiators comparing to people they have working at short sales departments, most of whom have no background in real estate valuations, negotiations, asset management or any other relevant field; are overworked, underpaid, indifferent, unresponsive, rude, and overall incompetent to handle the process).

Once the BPO comes back, the bank's negotiator will respond to the offer. If the offer is over 10% below the BPO value, expect a counteroffer or an outright denial from the bank. The fun part is that you'll never get to see the BPO, no matter how insane it is. We had once a house with a cracked foundation and a fair market cash offer based on the fair market value of the house minus the cost of repairing the foundation (which is about $35,000). The bank refused to take our offer because of the BPO value, which was done only from the outside and didn't even mention the cracked foundation. We even did a full appraisal by an outside appraiser and send it to the bank to show that this is a fair value, no luck. It took us four months to convince the bank to have another BPO done and actually go inside to look at the foundation cracks before we finally got the sale approved. Bpo Bank Of America

Bpo Bank Of America - Seven Mistakes to Avoid As a Buyer When Buying Short Sales

By: Real Estate Expert

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