Since I provide short sale funding for investors flipping properties that are upside down in value, I am often asked the question “Do lenders focus on their net or the price the BPO comes back at”?  The simple answer is that it depends on the lender, so once you have submitted your offer the mitigator’s response to the offer will give you a good indication.

You can then structure your offer to make them more happy, while not necessarily changing your total money out of pocket.  Here is a little video tip I created along with an in depth explanation below.
 

EX – Let’s say you are offering $300k on a home and you are paying all of the closings costs above that.  We’ll say those closing costs are 3% of the purchase price, so about $9000.  You are into the home for $309,000, right?  If the lender says your offer needs to be higher, you could change your offer to $309,000 with the seller paying 3% towards your closing costs and prepaid items. 

You have raised your offer price, but your total investment is still $309,000.  Make sense?  You have gotten closer to the BPO price like the lender wants but you have not increased your cost to purchase the home.  There are several other ways to work your offer and the HUD to accomplish a win-win situation for both you and the lender.  If you are looking for more guidance on offers and HUDs, I would suggest you take a look at Nathan Juraweizas he is one of the brightest minds in the business when it comes to these scenarios.

Simply put, he who masters the HUD wins.