Well, probably not a show we’ll see in the new HGTV line-up, but reverse staging is a form of short sale fraud that is becoming increasingly common.   Unlike traditional staging where a home is de-cluttered and dressed-up to present the best possible appearance, reverse staging accentuates the negative features of a home.  Reverse staging is part of an attempt get a low Broker Price Opinion (BPO) of the actual value of the home by inflating repair estimates and making the home appear to be in greater disrepair than might really be the case.

A Broker Price Opinion is a mini-appraisal, ordered by the lender in a short sale to determine how much they should expect to recoup from the sale of the property.  It is ideally performed by a real estate broker or agent who is familiar with the market and is a critical component of the short sale process.  If a BPOcomes in above fair market value it becomes more difficult to get a short sale approved, as it is likely the lender will want to hold out for a high offer in line with the BPO.

Trying to manipulate the BPOto reflect a below market price is usually done to accelerate a sale.   However it is also done by agents who will hide a higher offer from the lender, rig the sale, and then turn around and flip the property for a profit.  No two ways about it….this is fraud.

In most every short sale transaction all parties are asked to sign an “Arms Length” Affidavit that acknowledges that there is no fraud in the sale of the property.  As a short sale agent, it is my ethical responsibility to protect the best interests of my clients – this includes protecting them from any involvement in a fraudulent sale.  So, reverse staging might help short sale a home more quickly, but it could also land you in jail.

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