From home flipping to home “flopping”

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New federal rules enacted to speed up short sales mean banks will have
to rely increasingly on broker’s opinions on the values of homes. Banks
have been using BPOs, or broker price opinions, for list prices in a
market that has a lot of short sales and very little time. BPOs can
cost around 10 percent of the cost of a formal appraisal of a home.
Flopping is defined as a practice where the BPO gives the house a lower
value than its actual worth, and the bank sells the property at that
price. The lower BPO price means the buyer can then flip the house for
its true value. According to Peter Zalewski of Condo Vultures, home
flopping is a trend that is happening in South Florida. [Miami Herald]

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