Could Their BPO Value Be Any Worse?
What BPO value could be worse than no value? The Loss Mitigation department told me that they don't disclose their BPO amount. How can I negotiate if I don't know what BPO amount they are working with? Isn't it like stabbing in the dark?
This is how it went:
I found a potential short sale deal. The owner let me know two other investors had already sumitted short sale packages that were rejected by the bank because their offers were too low. So as not to waste my time putting together a short sale package, I asked the owner to call her bank and ask them what the BPO value was. She called me back and said it was $37,000. Some people on this site have said the bank will take 80% of the BPO which would be $29,600. Since the most I'm willing to pay for the property is $25,000, I figured it was close enough to as least submit an offer.
I submitted a Purchase Agreement for $20,000, my proof of funds letter, and a Release of Information form. I figured they already had a hardship letter, financials, etc from the other short sale packages.
I called the Loss Mitigation department and they said they wouldn't consider $20,000. When asked what they would consider, he said $50,000. $50K? I asked. He confirmed. Then I asked what was their BPO amount and he said (with an attitude), I'M NOT GOING TO GIVE YOU MY BPO AMOUNT.
Now I'm stuck for this deal. My only thought is to wait a couple of months and see if they're more willing to negotiate.
Any suggestions or shared experiences would be appreciated.
Jamie
[addsig]
Kind of the same thing happened to me this week.
BPO came in at $47.5 (I saw it). I had offered $36. Bank said the lowest they would accept was $50.
Huh?
The home is v. early in foreclosure process so I too figure I'll try again later.
Lenders are all about their money. Of course they are going to try to get as much for the house as possible. The price might be higher once you add in all the fees the lender has to pay to foreclose on the property, like attorney fees. Lenders like to see the homeowners tried to sell the home to satisfy the debt prior to looking at a short sale request. So, if the homeowner had the property listed with a realtor before you met with them, then send in a copy of the listing agreement and tell them that after X days on the market the realtor was unable to sell their home. Make sure you submit a complete short sale package, even if other investors attempted it.
Tanya
Hi acerview,
What is the Current payoff andf ARV?
BAMZ
BAMZ,
Mortgage Payoff: $ 73,000
After Repair Value (ARV): $87,000
Jamie
_________________
The more you seek Knowledge, the more Wealth will seek you.[ Edited by acerview on Date 12/08/2003 ]
Hi Jamie,
What comps and or repairs do you have that would justify an offer of $20K?
Also, did you meet the realtor at the property when the BPO was completed?
BAMZ
Tanya, a very good post pretty well covers everything.
A Lender has a property go into foreclosure it is assigned to an officer of the bank aka REO to check it all out. He looks at the originating appraisal and if (which is rare) he is smart, he calls back the originating appraiser and asks for an update for free if that appraiser wants to keep working with the bank. Most do not, they pick up a phone and call a Real Estate Broker and ask him to give an Opinion as to Value of the Property. The broker for about $50 drives by. If he is an honest man he lowers the window while passing and guesstimates. The Dummy REO/aka Loss Mitigator/Walter Mitty, then takes this figure and enters it on the fly leaf of the file.
Now that is what you are working against. Of course in the present instant you are way too low unless there has been a major fire or somebody moved the house off the lot in a fit of passion.
To trump, (excuse me Donald) the hand as displayed by the REO. You obtain an appraisal (I assume you know an appraiser) Get one. Low but not insane.
You then on the letterhead of a Contractor, anyone will do as long as he is semi aware and has a license. List all the terrible things that have to be corrected to restore this dwelling to marketability.
With those two sets of goodies and the other things you have obtained. You beard the Lion aka REO in his den.
Faced with these truths he will then, if he values his job, work with you.
I usualy go in with my work clothes on, a bible sticking out of my pocket and the dumb look of a true believer family type person just looking for a roof to place his family under. An occasional "Thank ye lord." is helpfull but not required. Please do not call him by his first name nor ask for it and most of all do not describe yourself as Folks. The newly ascended take umbrage. They worked long and hard for the rank of being called Mr. and the experience of wearing shoes to work. This has generated some pretty nasty social skills. Bear with them, yes they too labor in the vineyard of commerce.
Nail em. Lucius
Lufos,
I just have to say that you are an extremely valuable part of this community, and really add a lot humor, levity, and hard core intelligence and investor savvy that can only have come from decades of experience.
I mean it when I say I feel blessed to be able read your posts and participate in these threads.
Thanks for your insights, Dave
I second it.
Lufos should be famous! Whats to say he isnt already--we just dont know.
[addsig]
Quote:
What comps and or repairs do you have that would justify an offer of $20K?
Also, did you meet the realtor at the property when the BPO was completed?
BAMZ,
I think that's at least part of my problem. I really have nothing to justify an offer of $20K. I based my offer on the seller telling me the BPO came in at $37K.
No, I didn't meet the realtor at the property. A new BPO wasn't completed. For this deal there was a BPO completed when an offer was submitted by a previous investor. Would the bank order a new BPO for each offer they get on a particular property?
[addsig]
Quote:Now that is what you are working against. Of course in the present instant you are way too low unless there has been a major fire or somebody moved the house off the lot in a fit of passion.
To trump, (excuse me Donald) the hand as displayed by the REO. You obtain an appraisal (I assume you know an appraiser) Get one. Low but not insane.
Lufos,
What was it that let you know my offer was way too low? Maybe that's the part I'm missing. The only numbers I gave you were the payoff and the ARV. If I can figure out how much the bank would consider as a reasonable offer just based on that limited information, I think that would save me a lot of time chasing deals that have no chance.
Will the bank really honor my appraisal? If so, I don't know that I'm willing to pay for it while I'm still learning (3 short sale attempts under my belt). Now, if I submit an offer and it doesn't work, it only cost me a little time. If I have to pay for an appraisal before I submit an offer, that's $300 per offer. I need to be confident I have a deal before I spend that money, and I'm not there yet.
Once I get the hang of these short sales, I would much rather order my own appraisal than try to influence the bank's appraiser/broker.
Also I got a dose of the nasty social skills you're referring to. An Ameriquest negotiator gave me an ear full because I submitted my offer as an investor (I have my financing in my business name). She went on and on as soon as I picked up the phone.
Jamie
[addsig]
I am not a short sale investor nor do I do a whole lot of bidding at the trustee sales. I do however try to keep up with what is happening in the investing market in general and obviously with sub to investments in particular.
On one of my trips to the recorder’s office one day a few months ago, I asked one of the investors that frequent the trustee sales on a daily basis as to why they were still going to the auctions and not pursuing the short sale route. He said that the short sales were a bunch of BS, as the lenders knew they could make more money by having the properties, that they knew they were taking back, go to the auctions. The lenders would only look at offers that were higher than they knew they could get at the auction or they wouldn’t even bother to look at them. He also said that the lenders were willing to take the risk as they were getting top dollar for the REOs, so they didn’t mind keeping the properties on the books for a couple of months.
The reason I am bring this up is because it looks like the lenders have studied the arena and know what is really going on in our markets. So if we are to remain competitive as investors, we need to also keep ourselves up to date as to what works in our market place and how best to handle each investment situation.
So my recommendation is for all of us serious folks out there to get going and know our markets and how best we can help those motivated sellers today or we may get left behind tomorrow.
You need to know your market inside and out; or at least well enough to get an offer accepted.
John (LV)