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How to Challenge a Short Sale Lender’s Valuation – And Win

Excellent advice on how to challenge a BPO valuation if there has been a factual error in their calculations. It happens...

 Short Sale Appraisals

Your short sale was approved?  Wonderful.  The buyer’s lender under-appraises the property?  Not so good.  What do you do? 

Do you call the short sale lender and tell them their comps were wrong?  Do you scream "the market is still going down, take the new price or the seller will file bankruptcy"?  Do you say "You’ll never get another buyer for this home”? 

The short sale lender has heard all that before.  Normally, they don’t care.  You’re just another whining real estate agent.  But there is a way to get a value changed if the circumstances are right.  How?  Factual errors.  Here is an example.

I recently had a Fort Walton Beach short sale approved for $117,000.  The house was a bit unusual.  It had a 350 square foot detached apartment.  The main home was 1350 square feet.  The property appraiser’s office considered the home 1700 square feet - the total living area.  Guess what?  That is not what the buyer’s FHA appraiser thought.  He only gave marginal value to the guest quarters, and primarily considered the home 1350 square feet.  Thus, his value was only $99,000. That is 15% less than the contract price and approved short sale amount.  That is all the buyer could get a loan for. The appraisal looked flawless to me.  I knew the BPO agent likely relied on the property appraiser’s total square footage, though, and that is how I planned my challenge.  Here is an excerpt:

Dear Sir or Madame:

1.     FHA/HUD appraisal for this property has found a sizable square footage error that was not reflected in your BPO Value.

2.     Public records states property is 1700 square feet, however, FHA/HUD appraisal measures home at 1350 square feet.

3.    This difference is 350 square footage less than your BPO value and public records.

4.    The actual and correct square footage brings the property value to $99,900 per current FHA/HUD appraisal.

5.    Please consider the revision of your value to $99,900 to coincide with FHA/HUD correct measurements

The short sale lender, Green Tree, submitted my challenge to Fannie Mae.  Two weeks letter they issued a revised approval for $99,000.  The seller was thrilled.  The buyer was ecstatic.

So next time you have a value-related issue on a short sale, and you are confident you are right, do your research.  If you can find a factual error in how you think the BPO was done, you may very well save your sale, and your seller from foreclosure.

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Email Wendy: itswendy@rulnickrealty.com

Fort Walton Beach FL Real Estate

Fort Walton Beach Short Sales & Pre Foreclosure Help.

Read Wendy's Fort Walton Beach Florida Real Estate Blog

Wendy is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine". Call Wendy Rulnick, Broker/Owner,to list and sell your home or condo on the Emerald Coast of Florida in Walton, Okaloosa and Santa Rosa County-  Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. 



Thanks for stopping by my blog!

Comment balloon 5 commentsLisa Bosques • July 31 2010 11:22AM

Comments

Great FYI

Posted by Nicole Kraus (Signature Realty & Associates) about 7 years ago

Good job on handling the situation and thanks for the reminder to stay in the problem solving mode.

Posted by Dan Pittsenbarger, Improving Conditions (Keller Williams) about 7 years ago

Thanks for the great post on Short Sales.  Need all the help we can get as they are a real pain.

Posted by Edward & Celia Maddox, EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD (The Celtic Connection Realty) about 7 years ago

Lisa,

The challenge I have faced is that the Mortagage Servicer will not share the BPO valuation. In 3 recent situations, the counter-offer made by the lender was the last sale price on a similar property and higher than the offer. I submitted disputed BPOs but the lender would not budge.  The Buyers all walked. 

Posted by Carol Skon, RB, Kauai, Hawaii Real Estate (Green Realty Group) about 7 years ago

Lisa - Thank you for sharing :)

Posted by Wendy Rulnick, "It's Wendy... It's Sold!" (Rulnick Realty, Inc.) about 7 years ago

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