There are so many techniques out there on how to successfully do a BPO on a property in foreclosure that you’re trying to negotiate a short sale on. Let me dispel a myth here. THERE IS NO ONE WAY TO DO A BPO! Don’t let anybody tell you that you MUST do it this way or you MUST do it that way. There are so many variables that go into doing a BPO, and so many different people involved and so many different properties… there just is not one way that will work every single time. On top of this, you (the investor) may or may not be the best person to be doing the BPO. Sure, you paid lots of money for your education, and you’re spent hour upon hour learning and researching the best ways to do this business, but you still may not be the best person to do it. Why? Who knows. Maybe it’s your personality. Maybe it’s the way you look. Maybe… there could be a hundred reasons.
What I found is that I know (academically) how to do a BPO, but I’m not the best person in my business to do it. I don’t know why, and sometimes I do a great job influencing it and getting the number to come in correctly, but over time, I found that my agent is more consistent at getting the number we need. What does he do? Well, I followed him around and I may or may not have the answer for you, so I’ll just spill the beans and let you decide. I’ll let you take this information and do with it as you please.
First off, what do I do? I show up at the BPO with the following. Comps (3 active and 3 sold… lowest possible within reason). Repair estimate (professional looking one). Hardship letter. Contract. I give all of this to the BPO agent when the timing seems right. Sometimes up front, and sometimes at the end of the BPO. You’ll know when you get there based on how things go with the BPO and the agent. I simply try to read the BPO agent and either point things out that are “wrong” with the property or not depending on his or her personality. See, you don’t want to come across as “Mister know it all.” So I act innocent and just point out the obvious. Remember to point out if it’s a declining market, or if there is a lot for sale, or if the property is a “one of a kind” that will be difficult to sell, or if “time on market” in this area is long, or if there is a lot of crime, etc etc etc. You want to point out EVERYTHING possible with this property. Of course don’t forget to get a cell phone number for the agent and follow up with them. Definitely give them the number you’re looking for to make this deal work.
I tell the agent that I’m the negotiator. That the homeowner is in foreclosure and is trying to sell the property and that the offer we have for it is $XXX,XXX. I don’t tell the agent that I am the buyer.
That technique worked well, but not every time.
Them my agent started doing BPOs for me. He got steeper discounts and seemed to be doing the same thing I was doing. The difference? I’m not sure, but I think it’s because he’s an agent and has some up front credibility that I don’t have. He’s also very convincing with the deficiencies on the property. He seems better able to “read” the BPO agent than I was.
The bottom line? My agent does most of my BPOs for me now. Why? Simple, he’s better at it. His compensation? He gets all the listings, period. That’s good incentive for him! Am I upset about this? Not at all, I’m more than happy to give up one more piece of the business. Now I have more time to answer questions in the forum for all of you!
I hope these simple techniques help you with your BPOs. Remember, don’t be rigid, instead be flexible. Try to read the BPO agent. Don’t get frustrated if the numbers don’t come in exactly where you need them to. Learn from it. Critique yourself. You’ll win some and lose some, that’s ok and a part of the learning process.
Good luck!
