Two BPO's On The Same Phoenix Short Sale With A 60% Difference In Value? What The Heck Is Going On?
Lately, our biggest challenge with our Phoenix short sale listings is fighting BPO values. In the declining market we are in, it is to be expected.
With that being said, I recently had an issue with a BPO agent (actually a Broker) that absolutely blew my mind.
I have a Phoenix short sale that has been listed since June/2010. After dropping the price 5% every two weeks, we finally received an offer for the home at $55,000 5 MONTHS after listing it.
We submitted the package to Aurora (servicing for Freddie Mac), and included detailed comps that FULLY JUSTIFIED the offer.
Thirty days later, they tell us that the BPO came in at $95,000. What the %&$#? I looked up the MLS history on the BPO agent, and he was actually a Broker whose listing inventory is 95% Freddie/Fannie REO's (Go Figure). I re-sent them the comps, showing three homes within 1/4 mile that had closed in the past 60 days for less than our listing. So, they ordered another BPO. Great, I thought!
Two weeks later, they tell us they will now accept $75,000 (but wouldn't tell me the BPO value). I'm assuming that it came in at or near our contract price, and they decided to "split the difference".
This was 45 days ago. I immediately called the buyers agent, and he told me "Good Luck", and dropped out of the deal. I put it back on the market at a "pre-approved" price of $75,000.00.
Guess what? Not a single showing or a phone call since then. 45 days.
Today, I received a call from the 2nd mortgage (GMAC), asking for a status. I explained that the 1st was insisting on a price of $75,000, and the buyer walked. I also told him that he shouldn't hold his breath on this one. It's going to foreclosure.
He proceeded to chuckle and tell me that GMAC did a BPO on the property in November/2010, and it came in at $60,000. In his opinion, it had probably dropped to $50,000 by now. No DUH!
IF YOU ARE A BPO AGENT, PLEASE READ THIS... NO MATTER WHAT THE "REO GURUS" TELL YOU, THE CHANCES OF YOU GETTING AN REO LISTING BY OVER-PRICING YOUR BPO'S IS NIL. THIS IS JUST A MARKETING TACTIC THEY USE TO GET YOU TO BUY THEIR "PIE IN THE SKY" PROGRAM THEY ARE SELLING THIS WEEK. WHEN YOU OVER-PRICE A BPO IN HOPES OF GETTING AN REO LISTING, YOU ONLY PISS OFF THE LISTING AGENT, HOMEOWNER, AND BUYER'S AGENT. SOME, LIKE ME, WILL DO EVERYTHING IN THEIR POWER TO SHOW THE LENDER THAT YOU'RE OPINION OF VALUE IS A FARCE, AND YOU WILL LOOK LIKE AN IDIOT WHEN YOU PRICE MY LISTINGS 60% OVER MARKET VALUE!
I decided to do some research. I looked at several BPO/REO sites, and noticed several BPO agents that feel they should over-price short sales when conducting their value research because "people would rather not wait for a short sale to be completed". In the opinion of several of them, short sales should be valued at 10-20% HIGHER than REO sales, when comparing the comps. No wonder!
Obviously, this is yet another system that is broken. BPO agents that make $30-$50 per BPO are determining the fate of homeowners that are just trying to "do the right thing", and they are losing their homes to foreclosure at an alarming rate. Most of the BPO agents that I've run into are good, decent agents that are just trying to get their foot in the door. Unfortunately, the bad apples are getting worse, and they need to be called out.
To make a long story short, I told the representatives at Freddie Mac and Aurora that we are done playing their games. I took the listing off the market today, and am waiting to see them lose money when they get it back as a foreclosure and try to re-sell it as an REO (and lose even more taxpayer dollars).
When they do it, I'll be the guy who sends it to everyone that will listen (if anyone is listening anymore, sometimes I wonder). No response from either Freddie or Aurora so far. Go figure.
OKAY, GLAD THAT'S OFF MY CHEST!
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Bob Hertzog
Summit Home Consultants
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Copyright © By Bob Hertzog 2011 *Two BPO's On The Same Phoenix Short Sale With A 60% Difference In Value? What The Heck Is Going On?*