I have written plenty in the past about BPOs but have never delved into it specific to a Las Vegas Short Sale!
A BPO means “Broker Price Opinion” and they are not appraisals nor should one get them confused with appraisals. Â A BPO has a different purpose. Â It’s almost like being a “secret shopper”. Â When we are submitting comparables for a list price (NOT value, Nevada’s law is very strict,) we are also looking at a myriad of other items that may help or hurt with pricing and marketing of the home:
How is the home being marketed: Is there no lockbox or an uncooperative tenant hindering showings? Â Are there only 2 photos in the MLS?
HUGE price reductions in a short amount of time. This is commonly seen in short sales. Â The house is priced WAYYYYYY out of reach (2005, 2006 prices perhaps) and then kerplunk – usually within 10 days after listing the property a price reduction is seen – usually below what the other comparable homes are selling or listed for. Â The strategy should be a series of small price reductions over a longer period of time. Â Some lienholders ask for us to report listing history so no one is fooling no one with the huge price reduction in a short amount of time.
Subdivision activity - what is the lowest, median and highest price sold in the last year. Â It’s going to be a little difficult to get a short sale approved for less than the lowest price sold in the last year. Â There are some exceptions such as condition (fair to poor) and declining market.
Occupancy – this is huge because lienholders must protect their asset. Â If the home is vacant and appears to be deteriorating from BPO reports, the lienholder has every right to rekey the property for preservation which includes weatherizing and maintenance. Â The Las Vegas Short Seller must still maintain the property if they do not want to relinquish this right.
MULTIPLE BPOs are ordered and most are exterior – no appointment – just drive by - so there is no way to “cheat” the system with the agent who actually has an appointment to come inside to look at condition. Â Not every Las Vegas Short Sale seller is trying to cheat the system, there are a few who try to take advantage but this is why multiple BPOs are ordered. Â There are checks and balances – and lots of “secret shoppers” driving by in the wee hours of the morning snapping photos of a property immediately after a default. Â Whether it is listed as a short sale – or not. Â A BPO obviously isn’t just about value or an appraisal – it’s about the bigger picture – making sure the listing is being marketed properly so the lienholder does not have any money left behind sitting on the table.
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Renee – This is a great explanation of how BPOs work and the purpose behind them.
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