bpo (9)

     If you are a Realtor or short sale negotiator who has done a short sale with Fannie Mae as the investor during the last few months, this blog post will likely raise a question or two.  For Fannie Mae Real Estate Price Fixingeveryone else, it will definitely also raise an eyebrow or two. Government conspiracy theorists are certainly not a rarity in this day and age. Depending on who you speak to, many of our fellow citizens can come off as paranoid and irrational when speaking about all the secret plans they seem so sure our government and those in power are plotting and planning. While the theory I'm proposing on here is certainly not up to par with the New World Order, Illuminati, One World Government folks, it is certainly some concerning and valid food for thought, especially for those of us in the Real Estate and Mortgage industry.  Take a few minutes to read this blog post, and you'll likely agree and come to find that this really isn't about a conspiracy theory, but a very real and disturbing trend that is happening in our housing market right now.

     Lets take a step back here and set the stage.  Over the last five to six years, we have seen real estate prices plummet in virtually every market across the country. This reality of the depressed housing market is certainly no secret. In many areas, prices have declined to as low as thirty cents on the dollar. Several years ago, As things became more and more depressed, our government stepped in.  Both Fannie Mae and Freddie Mac, who back the majority of our residential mortgage loans, were completely bailed out by the US government.  This forced overtaking was something that our government had to do, as the imminent collapse of Fannie and Freddie would have meant the complete collapse of the housing and finance industry, likely permanently.  This was extremely important, as instead of giving bailout loans to Fannie Mae and Freddie Mac, like the auto industry or the banks,Government Real Estate Price Fixing they actually took complete control of these organizations.  Our government then established the Federal Housing Finance Agency (FHFA) to "oversee" these organizations which are now referred to as Government Sponsored Enterprises, or GSE's.  Since then, the FHFA consistently dictates policy to these Government Sponsored Enterprises that still back most residential mortgage loans and completely control the secondary mortgage market.

     Now back to the present.  Fantasic news headlines in much of the country that in many of the markets that were hardest hit, prices now seem to get going up almost as quickly as they were once declining. Inventories are low, demand is high, properties are getting multiple offers from buyers paying over list prices the minute they come on the market.  But for those in the industry such as myself who are active in the short sale and distressed property niche, an interesting and disturbing practice that has been taking place.

Fannie Mae inflated BPO     In very recent times, just in the past few months, short sale agents across the country have been having difficulties with Fannie Mae short sales.  To be more specific, the difficulty has been with wildly inflated appraised property values that Fannie Mae has been insisting on for short sale properties. For those who may not know, we are not talking about regular appraisals, traditionally ordered by a buyers lender in order to justify a purchase price.  In this case, we are talking about appraised values that Fannie Mae places on properties, ordered by them and completed by their own appraisers, utilizing their own appraising and property valuation methods.  Utilizing these over inflated appraised values, Fannie Mae then demands more money for these short sale properties from patient buyers.  Anyone starting to smell the stink yet? Does this stink smell a little similar to the stink we all experienced several years ago with inflated buyer appraisals from before the housing market collapse?

Fannie Mae Inflated appraisal     For the most active short sale agents across the country, the past few months have produced quiet a few headaches with Fannie Mae.  It seems virtually every property valuation and appraisal done by Fannie Mae for a short sale is at least 10% or more above current market value.  Values so inflated, that there are typically no comparable sales at all to come remotely close to justifying their prices.  Prices so high, that it most cases it would be virtually impossible for a buyer to find a loan and get an appraisal that would match the property values and prices that Fannie Mae is demanding.  The ironic part, is that these same buyers' loans who are purchasing these properties would of course eventually be sold off to... You guessed it, Fannie Mae! Because of the massive number of loans backed by Fannie Mae, this is widespread and is effecting a very high percentage of current sales.  And when it comes to disputing these inflated values, it can be quiet a challenge for real estate agents and short sale processors to convince Fannie Mae to change their mind and sell the properties for actual market value.

     Put two and two together, read between the lines, and it makes perfect sense that this is just Fannie Mae's and our policy dictating governments' valiant and likely effective attempt at mass, government controlled real estate price fixing.  Control the supply (market inventory), control the demand (interest rates ect), and then control prices and force up property values by demanding more money.  Fannie Mae and Government controlled real estate price fixing.  The tail wags the dog, and the dog has no clue what is going on.  A perfect example of the reality that housing has become completely socialized, but with the illusion that its just all part of the market cycle.  Just my two cents, for what its worth.
Click Here for my original article on Government Real Estate Price Fixing

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“BPO” stands for “Broker Price Opinion.” It is a report for the given value of a property, that a real estate agent will give to a lender to determine what to do with a property where they have a loan. And it is just what it sounds like, an opinion! All they do is quickly glance at the recent solds in the neighborhood, and go to the house to take pictures(they are at the property no longer than 10 minutes – a time frame that no buyer would feel comfortable making a solid offer in, given that it is not enough time to do any due diligence on a property to see what it has/needs.

Without going into too much detail here, let me just tell you I met both an appraiser and a BPO agent at a property yesterday, on a property valued somewhere in the  $2 million range. Because I met both the agent doing the BPO, and the appraiser, the property will close because they have a keen understanding of what is really going on, since I took the time to enlighten them. Can you imagine if I just left it up to the opinion of the two people who had spent no more than a couple of hours looking at the subject property?!(and in cases of cheaper house, taken no more than maybe 20 minutes analyzing the value!)

And then this morning I met another BPO agent on another property we are doing a deal on, valued around only $100,000. The property probably would have came back to the bank with a broker price opinion at $130,000 or more if I hadn’t been there to meet the agent, in addition to sending her comps and letting her know the listing history prior to her arriving at the property. I also took the time to make sure she actually looked at all of the systems in the house and pointed out needed repairs. Had I not been there the agent would have not seen any of the needed repairs or structural issues to the house. These things have a significant impact to the buyer and many agents fail to realize they have two ends of each short sale transaction to work, not just the buyer, but the bank too!

If you were to ask a room full of real estate agents what the biggest factor is in the success of a short sale transaction, I would presume you would hear dozens of different answers. Answers ranging from how severe the homeowners hardship is, to how much money in retirement accounts the homeowner has, to whether or not the person that is on the loan actually ever lived in the house or was just a cosigner, or the most common…”who is the bank?” I would like to think one or two agents would get it right, but would be surprised to hear much more than that. While these factors do play a role in the short sale settlement, they are not THE most important factor.

The answer is simple, and it only contains three letters: BPO. The BPO is the hinge of the entire short sale. If you have a high BPO you are probably not going to close your short sale, unless that is of course, if you can get another BPO ordered and have enough time to go through that process. I have seen more short sales go to foreclosure because the BPO was not addressed properly then any other reason for short sale transactions not closing.

It takes approximately 10 minutes to comp a property(look up current home sales) and send that email to the agent who is processing the BPO, prior to them arriving at the property. It takes usually no more than an hour to drive to the property, meet the agent there, and then tell them where your offer is and the listing history,  shake their hand and walk away. Sometimes you may leave the property feeling like you are going to get a high-value, and sometimes it will be the opposite, where you will leave feeling energized and know that you are going to have a slam dunk deal when the bank finds out they are getting more money out of the transaction after their closing costs then the true value of the property.

Setting up properly and processing the BPO correctly as the listing agent will be the deciding factor in 90% of short sales. I don’t care what the hardship is or how much excess cash the seller has, or even how much assets they have or none of that. I care what the value is and what the net is to the lender. Since I do have control over these things, contrary to popular opinion, I close consistently the short sales I take on.

It’s not rocket science.. Influence what you have control over. This is no different than anything else in the real estate business or for that matter, life.

To inquire about referring Joshua Gayman a short sale in the Arizona area or for assistance with negotiating a short sale of your self or for a client, or if you are a homeowner and another state just looking for guidance and true counsel, give me a call – I’d love to chat!

-Joshua Gayman

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FOR IMMEDIATE RELEASE:

NAR Broker Price Opinion Resource BPOR

Michael Collins Earns NAR Broker Price Opinion Resource Certification

Sellers and Lenders Benefit from REALTOR® Expertise in Broker Price Opinions

Madison, WI — Michael Collins with Rock Realty has earned the nationally recognized Broker Price Opinion Resource certification. The National Association of REALTORS® offers the BPOR certification to REALTORS® as evaluating properties depends more than ever on professional expertise and competence, the best use of technology, and a commitment to approach the valuation assignment from all pertinent perspectives.

“As the real estate market evolves we are seeing more demand for broker price opinions, and it’s imperative that REALTORS® are knowledgeable and educated about how BPOs work, as well as the risks involved,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “The BPO Resource certification not only adds value to the services provided by REALTORS®, but also it helps practitioners grow their business.”

“BPOs: The Agent’s Role in the Valuation Process” is the required one-day course that provides REALTORS® with knowledge and skills to reduce risk and increase opportunities to create professional and accurate BPOs. In addition to completing the course, participants are required to take a Webinar. Once awarded the certification, REALTORS® will be eligible to receive BPO orders as a preferred provider.

In addition to providing members with the opportunity for BPO business, BPO Resource will explore the multiple uses of BPOs, how they can and cannot be used, and how to filter and select comparables to create expert and precise BPOs. The certification also assists member in creating more comprehensive comparative market analyses for their customers’ listings.  For more information about the BPOR certification, visit www.BPOR.org.

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NAR BPOR Certificate

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Banks holding on to unrealistic values....

We have run into problems with lenders being unrealistic with property values. No matter what we provide or try to explain, the banks reply with a number too high for us to get any sort of activity. They have denied requests for re-evaluation and our Sellers are forced to wait it out until they foreclose. Providing very current comp sales, explanation of the market, along with numerous offers at current market value doesn’t seem to make any difference. Their BPO was done and even if it was 90 days ago they are sticking with it.

Any help with trying to get the banks to a more realistic value would be appreciated. -Thanks

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This is just a follow up to my recent blog from a day or so ago.I had mentioned in my previous blog the Temecula BPO where the occupant did not have keys to the four children's bedrooms upstairs. I contacted the agent and she rescheduled an appointment for me again this morning at 9:00 a.m. All I needed were the 4 pictures since I had already taken all the other necessary pics previously.Well, i arrived right on time. knocked on the door, rang the door bell and no on answered. i called the Short Sale agent and luckily she answered. I explained the issue and she said she would call the seller. She called me back and a few moments later, the occupant opened the door. The house was full of people which made me wonder why noone answered when I knocked. The doors were still loacked axcept one. I was able to use a tiny flathead eyeglass screwdriver to open the lock on a second door (I brought one just for this reason). But the other two were standard key locks and, again, I was unable to take all the needed pics. I'm submitting the BPO with pics of the locked doorknobs and a notation to the Short Sale Negotiator.In closing let me impress upon you Short Sale agents once more that it is imperative that you meet the BPO agent at the property to assure the BPO is completed properly. Not only to provide your own comps and to point out any deferred maintenance issues or problems that would affect value on the report, but also to provide access for the BPO agent. Plus it is always good to be present with the homeowner to show you are doing your job.Just more food for thought.By the way, if you or someone you know is at risk of losing a home to foreclosure, please know that there are new options available to avoid this devastating occurance. And know that there is someone here you can trust to help. As a Certified Pre-Foreclosure Specialist, I understand the ins and outs of Short Sales and Loan Modifications. I am also a Wachovia and World Bank trained Pre-Foreclosure expert and well educated in the Government’s new H.A.F.A. and H.A.M.P. programs for helping homeowners facing foreclosure.
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Buyers & Buyer/Broker Agreements!

Well, I lost buyers today and I figured I'd vent here to all of you.There's been times when I've stopped working with a buyer before. Sometimes I fire them and sometimes I refer them to someone else, depending upon certain factors. But today, I just lost em.We've been working together for about 5 months and I've shown them quite a few homes in several areas. I've held their hand, helped them secure financing, explained the options and used my expertise to educate them in today's market. We've made 2 other offers and have been beaten out by the multiple-offer-auction atmosphere of the current repo market.I showed the husband a property on Thursday while his wife was out of town and he wanted to get his wife to see it. He really liked it and so we set up a time to go see it after church on Sunday, since his wife was due to be back Saturday, mid-day. Sunday came and I didn't see them at church nor did they return my call. After 2 more voice mail messages over the past 3 days, the husband finally called me back. He was a little hesitant and sounded very apprehensive on the phone. I thought maybe they had a death in the family. But then he said it, "uh...sorry to tell you, but...we already made an offer on that house with another Realtor".Inside my head I was yelling, "WHAT?" and going thru my mind was the vision of me shaking him and smacking him, saying, "What were you thinking?". But all that came out of my mouth was a calm, "Really? Hmmm."To make a long story short, they are acquaintances from church. Because I viewed them more like friends and not clients, I didn't have them sign a buyer/broker agreement and went off of faith and trust. I do that quite often with buyers whom I look at as friends more than clients. The wife got back into town a little earlier Saturday than expected and so the husband decided to drive her by the house he saw. The listing agent was having an Open House and they actually went in and saw the home. Then, the listing agent talked them in to making the offer right then and there with promises of saving them money and guaranteeing them they would get the house if they went with him. The buyer really couldn't explain exactly what the agent said or exactly how the agent was going to be able to accomplish this, but they wrote the offer up, submitted it and got accepted this afternoon, right before he called me.No, I didn't ask how he thought the bank's Realtor would get them a "better deal". I didn't ask why he thought the bank's Realtor would work for a one time buyer just as hard as he works for the bank that gives him 50 to 75 deals a year or more. I didn't ask what price he offered although I expect it's quite a bit more than I would have suggested for that home. I also didn't ask him how he was going to face me every Sunday and Wednesday at church from now on. I just said, "thanks for the call and I hope things work out for you and your family!". What I DID do was immediately go off my diet and buy a Venti Rasberry Mocha, drowning my sorrows in sugar and caffeine and asking myself why I didn't have them sign a buyer/broker agreement.It will be interesting to see how this deal of theirs all pans out. Perhaps in the future, I'll start having even my friends and family sign buyer/broker agreements. Or probably not and I'll be blogging about this issue again in the future the next time it happens.By the way, if you or someone you know is at risk of losing a home to foreclosure, please know that there are new options available to avoid this devastating occurrence. And know that there is someone here you can trust to help. As a Certified Pre-Foreclosure Specialist, I understand the ins and outs of Short Sales and Loan Modifications. I am also a Wachovia and World Bank trained Pre-Foreclosure expert and well educated in the Government’s new H.A.F.A. and H.A.M.P. programs for helping homeowners facing foreclosure.Click on the link below to find out more about Preforeclosure alternatives:http://www.partnerfirst.org/raywright/Click on the link below to search all homes available in the MLS::http://raywrightsellshomes.com/f-properties.htmlClick on the link below to read what other clients have said about my service:http://raywrightsellshomes.com/f-testimonials.html
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When listing a Short Sale one of the most important things during the process is the BPO (Broker Price Opinion). For those of you not familiar with these it is somewhat of a mini appraisal done by a Realtor to help advise the bank of the market value during a loan modification or short sale. It is important for the listing agent to meet the BPO agent to assist in providing detailed info about the property and it's value. You never know what the experience level of the BPO agent is. They might not even be the actual BPO agent and merely a licensed assistant. I do tons of BPOs for both loan modifications and other agent's Short Sales. What amazes me is how many times the listing agent doesn't show up when I have an interior BPO.Today, after driving all the way down to Temecula from Riverside, I found that the home was in a gated community. I tried calling the agent to no avail. I searched the MLS from my phone trying to find gate codes. There were none and the property I was headed to wasn't listed. I finally was able to follow someone else in and I was met by the homeowner. The homeowner didn't speak English. I don't speak Spanish. When she answered the door, she looked puzzeled at who I was and why I was there. The best I could do was wave my camera in the air to show her I wanted to take pictures. She reluctantly let me in but I'm not sure if she even knew why. The next issue was that 4 of her 6 bedroom doors were locked and I couldn't get in to take pics. Apparently the rooms belonged to her kids and they locked them before going to school. She didn't have keys.Well, I took pics of what I could and left, leaving another message for the agent to reschedule me driving all the way back down to Temecula AGAIN! I let the asset manager know I needed an extension and why. he thought it was funny.Foreclosures are a bad thing for homeowners. No one wants to be foreclosed on. Realizing this, the Government (along with cooperation from the banks) is making it far easier and appealing for homeowners to conduct Short Sales to save themselves and their credit from the terrible stigma and long term affects of the dreaded foreclosure. Short Sales are a great avenue to help homewoners and the banks are getting better at getting them pushed thru. But without agents out there that are willing to do their job and do it well, the homeowner is left...well, pretty much just left!So, agents...PLEASE! Help me help you! And homeowners, make sure you have copies of your kid's bedroom keys.By the way, if you or someone you know is at risk of losing a home to foreclosure, please know that there are new options available to avoid this devastating occurance. And know that there is someone here you can trust to help. As a Certified Pre-Foreclosure Specialist, I understand the ins and outs of Short Sales and Loan Modifications. I am also a Wachovia and World Bank trained Pre-Foreclosure expert and well educated in the Government’s new H.A.F.A. and H.A.M.P. programs for helping homeowners facing foreclosure.Click on the link below to find out more about Preforeclosure alternatives:http://www.partnerfirst.org/raywright/Click on the link below to search the MLS:http://raywrightsellshomes.com/f-properties.html
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Loan Modification Scams

Just a quick note to make aware some who may not be in the know. There is a television marketing campaign for loan modifications that is currently being shown nationwide. It touts interest rates as low as 1% and offers homeowners help with loan modifications. The extremely fine print at the end of the commercial states the truth but it is only on the screen for a brief moment before disappearing. The truth is that the commercial is for a 3rd party referral service that takes an upfront fee and then provides you information on loan modification companies and attorneys in your area. It's just a big costly scam.While there are many reputable attorneys and services that offer help with loan modifications, as a homeowner, you need not pay extra money just to get a referral to one of them. if you are in need of a preforeclosure specialist or help with a loan modification, be very careful and make sure the person you are dealing with is one of those reputable service providers.Just more food for thought.By the way, if you or someone you know is at risk of losing a home to foreclosure, please know that there are new options available to avoid this devastating occurrence. And know that there is someone here you can trust to help. As a Certified Pre-Foreclosure Specialist, I understand the ins and outs of Short Sales and Loan Modifications. I am also a Wachovia and World Bank trained Pre-Foreclosure expert and well educated in the Government’s new H.A.F.A. and H.A.M.P. programs for helping homeowners facing foreclosure.Click on the link below to find out more about Preforeclosure alternatives:"http://www.partnerfirst.org/raywright/"Click on the link below to search all homes available in the MLS:http://raywrightsellshomes.com/f-properties.htmlClick on the link below to read what other clients have said about my service:http://raywrightsellshomes.com/f-testimonials.html
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