BPO won't use short sale comps to complete the BPO on a SHORT SALE
Does anyone see a problem with this?
An agent sent over an offer of $300,000 on a extreamly difficult listing (very difficult tenent). She told me she can probably go up to $350,000. The list price was $339,000. We have been waiting FOREVER for the BPO. It came back and the negotiator called me today and told me the BPO came in at $480,000 and he was going to counter at that amount.
What!
I told him I would have to appeal it, and there was no way we could sell it for that amount. He told me the standard 3 solds, 3 actives, and any pendings. I appraised for Wachovia for years and totally knew the drill. Then he says.... make sure they aren't distressed, no short sale, REO, or foreclosure comps.
He's from Chase and said the policy is Fannie Mae's. I don't buy this at all. If Fannie Mae thinks there is a different value for equity sales, enough so to make it a requirement for comp selection, then aren't they fully admitting that their SHORT SALE would be worth less?
Replies to This Discussion
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Permalink Reply by Richard on
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I agree Lydia. With his argument, it sounds like that house will be on the market for some time. Make him show you the Fannie Mae policy and I'd say appeal it if it comes to that.
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Permalink Reply by Susan Meehan on
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HUD guidelines dictate that distressed properties aren't used for comparables...UNLESS no other true comparables exist. The seller or the seller's agent can ask for a copy of the appraisal/ comp materials used to come up with the bank's base price, and then if the comps aren't truly comparable they can point out the disparities.
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Permalink Reply by Jeff Payne on
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Susan, the words "true comparables" is the key. Say that a neighborhood had 30 sales in the last 6 months and three of those were non distressed. Would comparing a non distressed sale with a distressed sale be a "true comparable"? Time for BPO agents to do their jobs and not buckle under pressure from the company hiring them to come up with a different value.
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Permalink Reply by Smitty on
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Lydia, did you meet the BPO agent at the property with YOUR comps? I find that's the best thing to do or you never know what you'll end up with. I'm going through this with Chase right now. I had to wait until the old BPO expired and then push them to order a new one. I had to resubmit my whole package. I had my comps within a 1-3 mile radius (that's what I was asked for to dispute a bpo by chase) AND the buyer had an appraisal done and I submitted that which supported the offer and I STILL did not get anywhere with Chase. They denied the file and I waited. Mind you there was an auction on my property as well. I'm not a fan of Chase anymore.
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Permalink Reply by Kimberley Kelly on
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I have found Chase to be the worst with valuations over the entire past 4 years and I do not think they have improved their system even one bit. Really do not like to deal with them. The only Shorts I've been denied entirely were with Chase. Always on valuations. Several times they called me to "re-open the file under new guidelines" only to be turned down once again for EXACTLY the same thing!
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Permalink Reply by Jeff Corporon on
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I actually had a BPO agent tell me they had to bring in the BPO no less than 10% of list price or they were required to do additional paperwork. Of course at $75 a BPO, who would want additional paperwork.
They can bring the value in higher but not less than 10% of list price, even if the agent has several months before the sale date and is trying to net the lender the highest possible amount by listing it high in the begining.
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That backs up a conversation I had with a Chase negotiator who told me the value of the property was $160,000 and they would take an offer no less than $170,000. ??????????????????????????????
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I am having a similar situation - I submitted a ss offer to the bank for $180,000 (no seller concessions) list price was $185,000. They countered at $250,000! I called the "loss mitigation specialist" she told me BPO came in at $180,000 but Fannie Mae countered. She said Fannie Mae does this often. I also heard FM does not want to do ss because they make out better with foreclosure. The parties in this are IndyMac, Servicelink, and of course . . . Fannie Mae!
I'm current disputing and have asked to see the information they used to arrive at this counter. I would love to get some advise on this one.
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Permalink Reply by Beverly Cibulsky on -
Had a BPO agent tell me the same thing, he was not allowed to use other Short Sale comps! However, it did work out! This is not a Chase, but Fannie is the investor. Could be a new trend...?
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Permalink Reply by Tara Nagelhout on
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It is true, many reports do not allow the use of short sale comps....and it makes sense. Many short sale listings are fictional values. There is not reality at all, and thus, they are not reliable comps. Once the profit or proceeds of the transaction are removed from the equation the seller no longer cares about the value and it becomes a game of how low can it be priced to get an offer?....That doesn't make a reliable comp.
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Tara, I tend to agree that the listings can be ficticious values, that is why the BPO agent needs to know the market and needs to use like comparables. On the other hand, if we priced the listings based on how low we could go, they would be under contract immediately in my market. Any short sale that is 10% or more below what looks like market value will have an accepted offer very quickly. I often note on all of my BPO reports that a certain property is still a listing because of the price, especially with overpriced comps, if it were priced right, it would be a sold listing
I do not believe that sold comparables can be called ficticious. Once they sell, they may have set the market in some areas. In my market, it is hard to find non distressed sales for comparables.
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Unfortunately BPO agents many times can't use short sale comps, however most appraisers will. Short sale comps are "true" comps because it's an apples to apples comparison where a short sale comp vs a traditional sale isn't apples to apples. In a short sale, the seller doesn't necessarily care what they get for a price because most of them know they aren't getting money at closing. They also may be up against an auction deadline. The difference between a traditional value comp and a short sale is the seller has a compusion to sell before going further into debt and limited marketing time. These two qualifiers according to appraisal valuation standards means the property value should be considered a "liquidated value" - So, liquidated value and fair market value are two totally different things, but unfortunately the lenders want top dollar so they are forcing BPO agent to use "fmv" which is impossible.
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