There is yet another growing hurdle with short sales in the Atlanta real estate market; valuation problems with BPOs – specifically BPO’s higher than contract price that can sour the deal. The reason for the BPO is clear; banks do not want to leave money on the table. The result is also clear; many short sales are being delayed, renegotiated or cancelled as BPOs come in higher than contract price. Understandable that banks want to check values, but why do it on the cheap and not hire an experienced appraiser?
To begin a short sale, an offer is required. Typically that means an attractive – often low range – list price. Banks understand that and many will order a BPO be completed to provide them with an “impartial” opinion of value. Impartial? Most agents will work for low BPO fees in the hopes of getting bank foreclosures to list. Some – many – agents think banks like values on the high side of supported; they think this ingratiates them and may lead to listings. This year we have had 11 wildly inaccurate BPOs completed on short sales we’ve been involved with – gross agent incompetence is putting it nicely.
As a certified appraiser in Atlanta, they are of course dismembered with accurate data that was either missed or ignored. Over this year, we have helped fellow agents on maybe another 25 similar situations. The market will usually find “level” and if a home is priced “aggressively” (low) then it will see significant activity and likely multiple offers – a competitive market tends to give a good indication of market value.
Atlanta listing agents working with short sales need to be ready to counter BPOs that simply overstate value. Experienced real estate agents understand that many BPO agents tend to be rookies looking to break in; be ready with an abundance of credible data to counter their report. Remember, a bank may be looking for reasons to foreclose, it may require significant effort to keep a deal viable. We suggest:
- Secure appraisal level closed comps and grid them using the appraisal form.
- Secure appraisal level pending comps and grid them using the appraisal form.
- Secure appraisal level listing comps and grid them using the appraisal form.
- Pull market statistics for the area and for homes comparable to the subject.
- Detail –specifically – issues with and deferred maintenance present in the subject.
- Detail – specifically – adverse external influences that detract from value and appeal.
- Detail the listing period; time on market, number of showings, feedback .
- Write a strong narrative that cogently presents an opinion of value. Incorporate the data, market trends and subject information in a logical, easy to follow manner. Graphics and charts work very well and are often great for making key points.
- Have a trusted appraiser(s) to hire or consult with if needed.
At best short sales are a lengthy process, one that can fail at any time for any reason. The value of an experienced real estate agent cannot be overstated; nor can the ability to anticipate and alleviate issues before they develop. Over the last several years, The Hank Miller Team has partnered with the most experienced law firms to ensure short sale success in Atlanta. The combination of skillful legal advice, cutting edge sales representation and over 25 years of appraisal experience provide for over a 90% short sale success rate all at no cost to our clients. For questions about short sales in Atlanta or to arrange for our expert representation, email us at firstname.lastname@example.org or call 678-428-8276