No, once they decide the "value" of a property, it's like trying to pry a sucker from a baby to get them to change that! We used to do it more easily in the past...appraisal, challenge of comps, etc. Lately, it seems to be getting harder and harder.
For instance, on one of our files, they decided this property was worth $285,000. After pulling 45 comps in the area, all similar features (and much better condition) you could easily see that those homes were selling for $260,000. We even had the buyers order an appraisal...came in at $260,000. The home was needing repairs (but the wife wanted the home so bad, the husband was willing to pay FMV for it, despite the fact it needed $35-$40,000 worth of work) and was being comped against equal sized homes that were move-in condition and fully renovated. The only way you could get a $285,000 value was to go 3 miles out to a newer, bigger subdivision...the homes are 2,000 square feet bigger, bigger lots, and top of the line appliances, not needing upgrades.
After losing 4 contracts ($260,000 being the highest) they are insisting that they can get more for the house and we should "keep marketing" the home. The seller hasn't paid a mortgage in almost 2 years...or property taxes, as well. The homes in this area are still declining to accommodate the very large tax bills attached to them. And the contracts that we are getting are reflecting the work the home needs (the $35,000+ worth of work) so they're coming in at $230-$240,000.
I just want to reach through the computer and smack some sense into FNMA!!!! They actually told me that I needed to find a buyer who was possibly a cash buyer and would be willing to pay the $285,000 for the home not including the costs to repair the home...WTF? Sure...send me a sucker and I'll make it stick...but why would someone pay $285,000 for a home that needs $35-40,000 worth of work and only worth $260,000 (fully completed)...in an area that is still seeing adjustments? Huh? Did I miss something there?
Wait some time, keep stopping the sale date, and THEN it will sell for $240,000 six-nine months from now as it deteriorates in condition and prices decline further...
Thats what we're seeing all over the country. When they are too blind to see this also, its frightening.
We've had a few like that lately, especially BOA deals it seams in the last few months. THEY are fighting more and demanding 100% of the jacked up appraisal in some cases.
Here is a good one for you that you'll get a kick out of. A condo, contract at like $90K. Within 90 days the ONLY comps that are not new ones (buider still selling new ones...) have all closed between $85K-$95K. Should be pretty cut and dry.
They order a BPO and insist they ONLY use non distressed sales as comps (NO REO's or Short Sales). the problem is, the only non distressed sales are BRAND NEW CONDOS. So the lender demands this three year old condo that was tenant occupied and needs carpet and paint, be compared ONLY with NEW condos with a 5% commission to buyers agents, ALL seller closing costs paid, TWO Years condo dues, not to mention warranties and brand new everything.
None the less, they valued it at $129,000. Right at the same price somebody could buy a brand new one for. They then demanded this is the value and they could only accept around this price for the property.
Our ONLY choice was to wait three more months until the old valuation is out of date, then get another one. It will probably sell after a year or two for $70K-$80K...
Lenders KNOW this happens eventually, why in the world are they still acting like idiots knowing that eventually, one way or the other, they are taking lower and lower over time.
I get that they are taking a huge loss...but isn't that part of investing? I mean, you take a chance. The investors are acting like this should have been a "sure deal" and that they should be able to recover from all losses at everyone else's expense.
The thing is...you'll laugh...the original BPO was done last year at $285,000. Back then...it might have been worth that. But after a year of being vacant...and the further decline in this area (the property taxes are coming in at almost $11,000...for a $260k house!!!) the market declined more and this is what they are stuck with. I even told the negotiator..."Isn't it odd that this NEW BPO is the same, exact amount as the BPO was last year??" And he laughed...no comment.
I think they liked the old BPO better and decided that they were going to go with that one as opposed to any new ones. Seriously. This property has been in short sales since January of 2009. Since we've had the file, there have been TWO BPOs done...and they seem to, apparently, be the same amount as that one from he beginning of the sale! How odd, eh? LOL.
I just lost one to Wells Fargo. They dug in their heels at 122k on a Haverhill MA condominium. Fair Market Value was 110-115k. I had multiple offers but no one willing to go to 122k. The last 5 sales in the complex ranged from 94k-118k. The property ended up in foreclosure. Very disappointing for myself and the seller.
I do find that about every 90 days you can get them to re-evaluate the value. Not all the time but much of the time you can.
Does anyone have a contact for FNMA direct. I have a Chase FNMA that was two days past expiration. When I asked for a 7 days extension, FNMA ordered a new BPO and bumped the price 100K...and 25K over the BPO...
Well, this is part of the problem. This valuation was done in DECEMBER...6 months ago and according to a "desk review" the value is still good. Now, I don't know what they are looking at, but when I pull comps in this area, I show a "high" of $120,000...and that is for a house on 1 acre and 4 bed, 3 bath. Our house is on .25 acre with 3 bed and 1 bath. Those houses are going for $80,000.
I just got word that after the 35 comps I sent in, they have been rejected because FNMA's "desk review" shows that the value of our subject is still $120,000.
Maybe I should move to that area, right? Seems those values are holding steady (they're not, seriously).
I have the same problem with them on a Wells deal.. the comps are really lower . But the agent who did the BPO was an idiot and used larger sf condos .. I disputed the BPO & escalated the file & FNMA still wont budge.. I am having my client go before a chancery judge and hgopefully that will work as we will lose the buyer very soon so we can not wait the 90 days for a new BPO. Very frustrating how stupid some of these people can be that they really expect people to pay more than market value for a short sale.
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