Anyone who tells you that they have the “secret” to negotiating with banks on a short sale is generally full of it. The reality is that the banks are required by the investor who owns the mortgage to get them somewhere in the range of 88-92% of FMV as established by their BPO/Appraisal. There is really very little negotiation required as long as the offer is close to fair market value. The big challenge with the banks is staying on top of the process and making sure that they are actually doing their job and not just sitting on the offer.
Now that doesn’t mean that mistakes aren’t made with BPO’s or that challenges / issues with a property aren’t missed by the BPO agent. It happens from time to time. In the cases where mistakes were made, be prepared to go to bat for your clients and be prepared to back up the value you believe the property is worth. Redo your comps and take your own photos of all trouble spots. Use the feedback you get from the buyer’s agent to help make your point to get the bank to get another BPO.
One thing you can do as a listing agent to help insure that the BPO’s come in a reasonable number is to create a listing history that includes dropping the price by a standard amount on a scheduled basis. For example, you might list a property at $269,900. You may know that this list price is high to begin with and drop it 10K every two weeks. When the activity on the property picks up, you know that you’ve reached the price point buyers are willing to pay. You are getting fair market value for the property and are assisting the BPO agent to come in with the correct value. On the other hand, if you had under priced the property from the beginning or had large price drops, going from $269,900 to $229,900, it would look like you’re trying to do a fire sale on the property just to move it.
By taking a structured, systematic pricing approach, it shows to the bank that you tried to get top dollar and at no point have your tried to give the property away.
Once you get the BPO value to come in where you need it, the negotiation all becomes easy and you are 90% there to successfully completing the deal.
