Innovation in the development of new shady homeselling practices never ceases. Let me tell you about “flopping.” It can happen when a bank relies on a “broker price opinion,” or BPO, (rather than a full-bore professional appraisal) in agreeing to a short sale. From the Miami Herald:
The definition of flopping varies, but it generally includes a BPO assigning a lesser value to a home, which is then sold by the bank based on the discounted value. The buyer then flips the property, selling it at its true market value and giving a kickback to the Realtor who did the original BPO.
Realtors, like most salespeople, face their share of conflicts of interest and can, generally, be trusted to sort through them honorably, but this is a little much. . . On the other hand, it’s a great way to get the market moving again! An added wrinkle is that new Treasury Department rules require banks to accept a short sale if the offer is above some pre-determined benchmark. Typically that benchmark is a formal appraisal, but BPOs can fill in, in a pinch, the Herald says. The possibilities for hijinx are nearly endless. . . . .