ASC/Wells Fargo won't reduce Approved Amount based on Buyer's Appraisal. Any ideas???
Hi All. I listed a home at $180,000. We received 8 offers and selected the highest one ($210,000) to submit to the bank, ASC. They did an appraisal on 1/17/12 and came in with a counter offer of $220,000. The buyer accepted and we received our approval.
The buyer went through inspections and ordered an appraisal as part of the loan process. It came back at $180,000. When I notified the negotiator she instructed me to submit the HUD so they could consider the lower price. However, when I submitted the HUD at the $180K, she told me that they would not consider it because it is too low.
I called the Executive Resolution Department and was told that according to their internal calculations they will be losing money if they short sell as opposed to foreclosing on this property based on a purchase price of $180,000. Of course I tried explaining that they will be facing the identical market conditions if they foreclose and that they are basing their numbers off an inflated appraised value. Nevertheless, they are unwilling to do anything but deny the file if the buyer doesn't come up to the approval price of $220k. The loan amount is around $206,000 and they are offering the 2nd lien holder a sum of around $2500.
Can anyone explain this situation to me in a way that makes good business sense for the investor to make the choice to foreclose in this situation? Also, any recommendations on a course of action to get this transaction closed?
Replies to This Discussion
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Permalink Reply by Ken Patterson on
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Not sure where your home is, but I would submit a copy of the appraisal with a signed purchase price addendum. If you are in California, refer them to SB1737 and advise them that you will be forced to turn the matter in to the CA Real Estate Commissioner for review of ASC as well as the BPO agent providing the data to them for making a substantial misrepresentation of value... I am not a fan of ASC.
"...authorize the commissioner to suspend or revoke the license of a real estate
licensee who has been guilty of generating an inaccurate opinion of the
value of residential real property, requested in connection with a debt
forgiveness sale, in order to manipulate the lienholder to reject the proposed
debt forgiveness sale or to acquire a
financial or business advantage..."
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Permalink Reply by Robin M. Willis on
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Ken,
This is interesting information. We are in Arizona, but I wonder if we have a similar law. Also, they got a full blown appraisal, not a BPO. I have asked the bank to give me a copy of it, but we'll see if they go for that.
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Permalink Reply by Sheila Vardakis on
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My question would be did the bank have a BPO or appraisal done to get the $220K? You mention appraisal but that term is used even when it is a BPO that was done. Either way, I would dispute their value. I would also see if the buyer is willing to do another appraisal. Hope you get it worked out. :)
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This was an actual appraisal. Since the buyer was an FHA buyer that appraisal is stuck with them for a while. They tried to go Conventional but were unable to qualify. We ended up going to our back-up offer, which was a conventional loan and are now waiting on a reply to that offer based on their new valuation (done a couple of weeks ago)
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