In this market, many agents have started doing short sales as they watch their "normal" transactions decline.  But they have entered this very complicated market late, and have not gathered the experience to make the transactions work.  I wanted to take a moment and share with you some reasons why this occurs.  Each of the next few articles will cover a different reason why Short Sales can fall apart.

The first reason?  The BPO.  A BPO is a Brokers Price Opinion, it is the bank asking for an "independent opinion" of the market value of the property.

Who does a BPO?  A Real Estate Agent.  One who is not involved in the transaction.  And if it comes in too high, the lender may terminate the transaction because they feel they are not getting enough or money is being left on the table.  So what's the problem?  The agent may not know anything about the area or the type of property involved, and turn in a bad BPO - a price not supported by the market.

There have been cases where the BPO came in 30,000 to 40,000 over the reasonable value of the property - over the last two recent sales in the same complex, for example.  The lender stopped the transaction unless the buyer could come up with an additional 25,000 in their all-cash deal - when the buyer had offered more than the last comparative sale.  This is not the lender's fault, they just asked for a second opinion, and relied on someone they thought would do a competent job.  The seller's agent could not affect the outcome because they are not involved in the process.

But there is something the seller's agent could have done to keep this from happening.  Something I do on every transaction, when submitting the Short Sale packet.  I prepare and submit a detailed market value analysis with the package that can easily refute an overvalued BPO, showing that the offer is valid and the best the lender is likely to get.  While I can't put that information here, where other agents can learn in hours what it has taken me years to develop, I will gladly show it to you at my listing appointment if you like.  This has saved many transactions from falling through this trap.

In a few days, I will post another article about another reason why Short Sales fall through.  Please let me know your thoughts by posting a reply to this message.  And take a look at my Short Sale FAQ (Frequently Asked Questions) to learn more about what it takes to put through a short sale packet.