Short Sale SellersDecide on Short Sale Amount
Deciding on a price is not an exact science but there are some tools that will help you find a good price.
BPO (Broker Price Opinion) – it’s a generalized opinion or value of the property. They are ordered by the lender and sent to a 3rd party or BPO company, like First American. The company will have a list of Realtors in each state and the first Realtor to respond to the request and accepts the offer will get the order.
FMV (Fair Market Value) – This is determined by a Realtor using the MLS. It is a comparative analysis showing sold comparables homes within the same area and have similar square footage, number of bedrooms, baths and more. A comparable time line is usually 6 to 12 months for the test. When you perform the test, take out the two highest and two lowest comps and average the rest.
ARV (After Repair Value) – This is a slang term used with real estate investors and is really the same as FMV. ARV is more of a guess by using comps that were not sold by a Realtor and can usually be considered as being less accurate.
Usually FMV and or ARV will come in about 10 to 20% higher than the BPO ordered by the lender. If this is the case, you may want to consider offering 60% of the ARV or FMV value, of course you should also consider the amount of repairs the property needs.