I do not believe in BPO’s (Brokers Price Opinion). Do not get caught in this trap.

Debt: $800,000 - Results: $45,000 pay-off
"His intelligence, thoroughness and professionalism were reflected in every member of his staff and their tireless efforts resulted in three very positive workout conclusions."
"Don's confidence in his ability was reassuring. He knows the game well and can rightfully be called a master of his art. Today I have a new lease on life."
Debt: $3.5 million - Results: $100,000 pay-off, remainder forgiven
"My debt has been reduced to a level that my real estate can support. With this enormous burden lifted, I can enjoy my work again and I feel great."
Debt: $1.6 million - Results: $75,000 pay-off, remainder forgiven
"After trying to resolve things on my own, I subsequently went through two Boston law firms with no success."
Debt: $800,000 - Results: $45,000 pay-off
"His intelligence, thoroughness and professionalism were reflected in every member of his staff and their tireless efforts resulted in three very positive workout conclusions."

I do not believe in BPO’s (Brokers Price Opinion). Do not get caught in this trap.

On November 8, 2009, in Business debt workouts, SBA Loans, SBA debt forgiveness, by Don Todrin

In negotiating a workout, in many situations, the conclusion is an amount based primarily on your ‘liquidated net worth’. What else could it be? It is the only reasonable measure of what the result would be in a real defaulted bank loan, foreclosure and liquidation by auction, the only kind of liquidation the bank will utilize.

So if liquidated value under auction is the bench mark, what happens when a bank orders up a BPO (Brokers Price Opinion)? They are obtaining the highest possible value without being controlled by regulated standards such as those controlling a licensed appraiser.

A BPO is the opinion of a real estate broker, licensed to sell real estate, not appraise it. Presumed market value, what it would sell for on the market in the due course of time, a year or more , whatever absorption is in this market would be, hardly a likely result if foreclosed and auctioned. But by using a BPO the bank pushes up the borrowers amount of equity and the liquidated net worth is valued with the inflated BPO and the bank has improved its bargaining position. The greater the equity, the higher the liquidated net worth and the more it will cost to settle, negotiate a workout.

Do not allow BPO’s to be used, use only certified appraisers, the truth works….

Recent example, a property we are trying to short sale had an appraised value of $525,000, 6 months ago, the bank ordered a BPO and we had our appraiser re-certify his 6 month old appraisal, and the BPO came in at $500,000 but the appraisal came back at $375,000. Ouch! Now what? We fight with the bank over which is best, yet obviously the BPO was merely an opinion on some possible future sales price yet the appraisal was a real appraisal of current value…we win.

There could be no higher an appraisal as a BPO. It is unreliable, does not on form to any standards and should never be considered a valid determination of value, especially in a liquidated manor.

Do not let this happen to you, offer to pay for a real appraisal, it will serve you much better and is worth every penny it costs.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.