Situation:
Property Listed since 09/18/2012 at $280K and since dropped to $260K, I had 4 buyers with 3 mutuals, first 2 was offer at $255K w/ 3% cc and $250K w/3% cc, respectively, both lost financing. The second buyer was counter by Wells at $274900 w/$8000 cc to buyer, buyer walked because was unable to get financing back in Dec 2012. Current was offer at $270K w/$7800 cc to buyer, Wells completed another BPO and countered at $377K!!! Here are the red flags I sent to the negotiator and every Equator contact I could CC it on to:
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1. The BPO agent’s office is 31+ miles away from the property and does not seems to know the subject’s market.
2. The last sale in the neighborhood, attached, which is an exact same model and color to the subject, the only different is it is located on a corner lot. It sold on 06/08/2012 for $260K. I attached the last 4 Sales that indicated the value has been declining in the subject's neighborhood since 2011.
Sold $319,000 on 06/27/2011 via REO
Sold $290,500 on 11/07/2011 via Short Sale
Sold $269,000 on 02/22/2012 via REO
Sold $260,000 on 06/08/2012 via Short Sale
3. Attached is the listing history of the property, the first Cancelled (09/18/2012) listing was because the prior agent was related to the Seller and therefore, violate the Arm’s Length Affidavit. The second time it was cancelled (10/08/2012) was because I transfer to a new brokerage. As you can see, we’ve been marketing it starting at $280K and the only offers we have ever gotten was $250K with 3% closing cost back to buyer to $270K with 3% back to buyer. This by far is the best offer we gotten yet and I have attached all of them here for your review.
4. As you can also see from the listing history, the property was marketed back in 2011 going into 2012 for the $365K and it was cancelled because there were no showings or interest at that price.
5. If I could sell this house for more than $320K, it won’t be a short sale. And obviously my commission would be a lot higher too, but unfortunately the realistic value of the property is not anywhere near $377K, nor is the current loan balance.
6. The last Buyer we had was countered by the previous negotiator at $274900 with 3% closing cost for the buyer, but the buyer lost their job and couldn’t qualify for the loan, therefore had to backed out. What happened to that counter? That was only a month or two ago. I am not aware of any market in the USA appreciated by about 150% in the last 6 months.
7. Brand new constructions in the area is going for $285K - $325K, how could this the subject compete? CMA of 0.5 miles of the subject, +/- 600 SqFt and +/- 10 years shows comps ranges from $270K - $350K (with better quality and in more desired, gated neighborhoods), how did the subject priced even above this range?
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I have asked to have a value dispute initiated but the negotiator never answer any of these questions or inquiries, does anyone have a contact with Wells I could escalate this too? I am currently speechless at their system, past 2 Equator contacts and work ethics.
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Replies
Just my .02 - the comps you are using are too old and all are distressed sales. I know here in CA, the lenders will not accept a BPO with any distressed sales or more than 6 months (to the day) old. Make sure the comps you are providing are within the lenders guidelines. Values are increasing here in CA and likely they are in WA as well. Investors are not selling at "fire-sale" prices anymore.
As others have suggested, someone should get a certified appraisal.
Who is the Investor?
Best of luck,
Wells Fargo I see is starting to pull numbers out of the air like Fannie. I had one that was approved at 297,000 and the buyer needed more time since he was getting a mortgage. Wells Fargo refused to extend it by a week and then did another BPO and the number came back at 597,000. Needless to say I disputed the value and sent them an appraisal which they didn't even look at. Now they want a value at 375,000. I find banks like Wells Fargo and Bank of America once they have a number they stick to it.
If Fannie is the investor then the value they countered at is really just a figure they pulled from the fanny :)
Here's what's going on and how you deal with it:
http://www.realtor.org/articles/gse-short-sale-valuation-problems
Hi Trong,
That can be frustrating. Here is an example of a response from Wells Fargo on one of mine for dispute, just to give you an idea of what they need:
If you would like to dispute the value the process is as follows. Please provide needed items to complete one of the 3 options listed below along with explanation of why you feel the value should decrease.
1. We need a list of at least 3 sales that sold prior to the completion of the appraisal. These sales need to be true comparable to the subject and not inferior in size, acreage or amenities.
2. If the dispute of value is based on repairs, then we need an estimate of repair prepared by a contractor.
3. If another appraisal is submitted as proof of a lower value, then the comps used in the appraisal will be looked at to verify they meet the requirements in item #1.
The items listed above can be sent to me. I can then forward them to our appraisal disputes department. Please be advised there is no guarantee that the dispute will be approved.
If you use their methodology so that your argument can make sense to them, you should have a good chance. Also, is this a HUD insured property? If so, you may be able to open a ticket with HUD if Wells refuses to respond to you.
Also, I cannot say if this contact will be helpful to you or not, but I recently escalated a shortsale transaction to this person at Wells and cited UDAAP violations. Our file was moved forward.
Richard Schwanke
Work Director
FHA Short Sale
Wells Fargo Home Mortgage l 11200 West Parkland Avenue l Milwaukee, WI 53224
MAC X9400-015
Tel 414-214-4945 l Fax 866-969-0103
Richard.Schwanke@wellsfargo.com
Thank you Mega-Pros,
Unfortunately this is not a FHA loan, but I will reach out anyways just in case he could help, thank you very much for the contact.
I asked for the dispute process and how to start one, but I was never given one. I was only told to submit the Best and Highest offer through Equator to continue, which I did, then a few days later got the SS Decline message and the property is gone from my queue. I asked the BPO agent about his value and he said although he can't tell me the exact number, he can only say that his value is no where near that number. What also don't make sense is that they counter at $377K when the loan balance (1 loan) is at around $330ish with all of the backpayments. This is not a settlement but a forced foreclosure.
I am also in the process of communicating with a Short Sale Manager at Wells Fargo who I met briefly at one of our NAHREP event here in Seattle and does not seems like anything will come out of it as he indicated that "there is a debt to be settled and the investor is following the guidelines they feel are within their legal right to get a fair settlement. The homeowner has the right to contest the decision and the courts will decide" when I told him I feel if the investor foreclose on the property, I feel there will be a lawsuit coming. Through their actions, asking for more than the loan balance, is not a "settlement" but the opposite. When I asked for the investor contact info, he said, " I don't have that information nor do I know where to obtain it. I’m certain the attorney will be able to contact them should your homeowner decide to take that action."
Wish me luck with Richard :)
Is the seller delinquent? If not, that is your problem. I have had several short sale "counter offers" where they are requesting a sales price high enough for the bank to get a full payoff, this is regardless of the actual value. In order for it to be considered at FMV, the seller must be greater than 31 days delinquent and must have a valid hardship to be submitted to the investor.
Don't bother with the BPO dispute. It is a waste of time without a full blown appraisal. The issue is not the home value, it's the borrower's payment status. Good Luck!!
Ah, I see. The servicer knows that Washington is one of the 13 non-judicial foreclosure states and has the misunderstanding that we just roll over and let lienholders do whatever they want. Since you are in my area Trong, yes, I can definitely hook you up with some great resources.
1.) Call Attorney Travis Gagnier and just tell him Meg O Harrison sent you: 253- 927- 7117.
He will provide a no cost consultation for your client (you can come too) if you tell him you were referred by me. Your client does has options including The Fairness in Foreclosure Act mediation, lien stripping and more.
2.) If this is a MERS filed foreclosure, which 99% of them are in our area, you seriously need to be up to date on the Washington State Supreme Court ruling from August 2012. That is an easy to read synopsis of the ruling and you can find the entire ruling on the State Supreme Court website
IS this a aFannie Mae or Freddie Mac backed loan? I have recently run into terrible problems with their valuations. I am currently working on a 2nd that is backed by Fannie. The first will be paid off and the 2nd was only 17K short. We havd a offer of 260K which Fannie (through CitiMortgage) countered at 280. This property needs about 50K in repairs, roof, code issues with an enclosed garage done without permits, etc. They buyer came back at 263 and Fannie has denied it and revalued the property at 310 and will only review offers in the range of 290K. Meanwhile the 1st mortgage forecloure fees and costs are rising and we are noe close to 30K short even at the 263K price. Fannie and Freddie seem to ingore REO and short sales in their comps. We have strong comps for this property at 250K and they simply don't care. This is going to create a huge problem going forward. If these properties just sit in inventory and amass costs to maintain, the taxpayers (the real owners of Fannie and Freddie) are going to foot the bill when they are forced to finally dump them into the market.
MLS - make sure it is properly set up to show the true value of the property. Define in your agent remarks why the property is priced the way it is "price is indicative of comparables within close proximity and similar condition in need of repairs. Property backs to freeway with high traffic", etc.
BPO - did you prepare a bpo with the comparables most similar and literally compare and contrast between subject and comparables?
If you have done this and you're still not successful, you can file a complaint with an 'outline' style timeline of events with the bank.
BPO and complaint forms attached.
I've done so many BPO's and the most noticeable reason for not being able to accurately determine pricing of a property is lack of property descriptive photos (good, bad or ugly) and lack of agent remarks, defining why value is priced where it is. Property description, agent remarks and photos should be targeting the BPO agent and appraiser. These are not standard sales, they are short sales. Make sure you're goal is to get the most offers, not sell at the highest price on the market. Once you accept an offer, if you need to change comments and photos, do it. Appraisers and BPO agents get info from the MLS. Keep it up to date and descriptive. Keeping in mind, the bank wants to sell at market value. Don't target cash buyers if property is in good condition. MLS should target the right buyer and once an offer is accepted, the BPO agent and appraiser. Short sales are a multi-level process. MLS input is not subject to only the time of entry. So many agents try to put 'turn key' photos and make the property pretty. That tactic should be reserved for standard sales. In short sales and REO, you sell it like it is.
When that doesn't work, work through the system.
Call the bank, keep asking for a supervisor and continue taking it to the next level until someone who knows what they're doing will help you.