SHORT SALE APPRAISALS
We are seeing a recurring issue in trying to close deals when there is a third party approval required (Short Sale). The lender (servicer, investor, MI company, etc) is countering the offer with an inflated value on the property. When we challenge the counter by pointing out that the comparable properties don’t support their inflated counter offer the lender invariably replies that the value was based on their appraisal. I find that reply to be somewhat insulting, but I can’t challenge it. I also believe that more times than not it’s actually not an appraisal but a BPO (Broker’s Price Opinion). That means the bank asked another Real Estate agent about the value and paid a minimal amount to get it. Then again, the bank might just be pulling a number out of thin air and claiming it’s an appraisal as we would never actually see the appraisal.
The way we have succesfully moved forward under these circumstances is to encourage the buyer to accept the counter and invest in an appraisal from their own lender. We sometimes extend the buyers additional diligence so they don’t have to spend money on an inspection if they don’t go forward on the deal. What this does is gives us an actual appraised value on the home and the lender that has to approve the short sale is faced with the reality of that appraisal. The short sale lender has reduced to the appraised value each time we have done this and the buyer has been able to close the deal at a true value.
There is some risk on behalf of the buyer, because if the appraisal comes in at the inflated number, then the buyer has to choose whether to move forward or not. I would point out that if an appraiser brought in the value, it is most likely accurate as most appraisers these days find it very easy to bring values in low.
Just another twist in our ever evolving real estate market!