Short Sale: BPO vs Appraisal

[sillygoosegirl]

I want to cry.

After 6 months, the bank got back to us on our short sale. They had a BPO (broker price opinion) done, and it came in very high ($50K higher than our offer). It makes me wonder if the broker who did it even saw the inside of the house. Just as an example, the BPO price ($133/sq ft) is the same as the sale price per sq ft of a slightly smaller house on the same street that we toured about 5 months ago. Compared with the house we want to buy, that house was in immaculate condition, granite in the bathrooms, an extra half bath, hardwoods on the main level, vaulted ceilings, a back yard that didn't have a swamp, etc. Overall, much higher value per sq ft. The BPO would be reasonable if the inside of the house was comparable to other houses in the neighborhood, but it isn't.

I'm not sure if there is anything to do at this point except walk away. I don't think there is any chance the house would appraise for anywhere near the BPO amount, and we certainly couldn't sell it for anywhere near that if we needed to (we want it to be our forever house, but you never know). The house was on the market for 5 months with an asking price lower than the BPO with no offers prior to ours, and it was on the market at a slightly higher price for a few months before that.

Anyway, the bank has basically said they can't work with us unless we raise our offer significantly. I'm wondering if there is any way we can get them to do an actual appraisal without getting ourselves on the hook to pay way too much for it.

[LoveTrains]

I am so sorry to hear that. Why did it take so long to get the BPO? That is crazy.

however, I am not sure of the price range of the property that you are looking at, but our BPO was also higher than our offer. However, that was OK and we still cleared because the bank just needs to clear 88% of the BPO after paying the realtor fees, etc. When we got the approval from bank of america on our short sale, it listed the BPO and then showed what from our sale price would be going to who and that it met the 88% threshold to the bank.

We ended up getting the appraisal for our financing done before we got the approval to close from bank of america (the seller's bank). It only cost me $350 and I figured it was worth it to determine if we thought our offer was reasonable and the numbers looked good before spending all that time waiting.

The good news is that my financing has been approved and we are hopefully closing on my short sale on November 5 or 6th. For reference, we had a signed P&S dated June 23rd.

In your case, I would probably walk. We are absolutely getting a great deal - if this house wasn't a short sale it would have probably sold for 25K over what I am paying for it. I also just locked my 30 year mortgage at 3.5% so I am feeling pretty good about this transaction making up for the way I am very underwater on a condo that I rent to others.

[sillygoosegirl]

It took so long because there was a divorce, a sudden and unexpected disablement of the owners' college aged child, some major surgeries, and then a bankruptcy in the interim. Or at least that's what they tell me. Very sad circumstances, but I guess that comes with the territory.

Anyway, we put in our "best and final" offer over a month ago now. They had some good argument for the higher price (area prices are up 10%-15% since we made the offer in April). Of course, our budget hasn't gone up much since then. Anyway, we offered another $17K and last night we finally got a verbal acceptance and the letter should be in the mail. I can't believe how long this is taking, but our agent thinks we can close before Christmas. I hope we can spend Christmas there, even if it is just us, some take out, and a can of paint.

We've also been continuing to look at other houses, but there just isn't much to choose from. There was one other house we liked, but we didn't move fast enough on it.

Did yours close as expected? Are you moved in yet?