ATP expiring soon due to appraisal coming in higher than market value...

I have a PFS with an ATP that is expiring soon.

Back history: Seller applied for the PFS program Spring of 2010, home appraised at $175,000 in March, 2010. Recieved offer of $173,000. Submitted complete ss package and lender "sat" on file for 10 weeks, all the while I was politely calling 2-3 times a week to get updates. I was constantly being told "file is complete, negotiator is reviewing, not asking for anything at this time". This went on for 10 weeks! I was constantly told I was not able to escalate for ___ more days! Their stories kept changing with ever call to the lender! When I finally escalated file, they admitted they had "dropped the ball" but sadly now, we have to start all over and order new appraisal/title search. New appraisal (Sept 2010) comes in $8,000 higher than contract price, and well over current market value (appraiser used comps that were 11 months old), and current buyer walks.

Good news is seller was issued ATP, bad news...appraised value too high and unrealistic so there have been no showings for months!

So now ATP will expire at the end of the month. My question is this...should I just drop the price to where I know it should be to bring another offer and then fight with the lender and ask for a VARIANCE from HUD??

Should I myself contact HUD now and seek a variance prior to receiving an offer?? How have others handled unrealistic values? If I reduce the price and bring them another offer less than their "faulty" appraised value, might that trigger another appraisal since the last one is more than 90 days old now?

Has anyone else had luck with this scenario? Seems like our "normal listings" are appraising for less than contract price, while short sales are coming in higher than market value and contract price!

Thanks in advance for any advice you can offer!! Happy New Year!

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Replies to This Discussion

Permalink Reply by Edee Campbell on January 2, 2011 at 7:12am

What is ATP and PFS?

Permalink Reply by AMY GERRISH on January 2, 2011 at 3:18pm

Have you lowered the price at all? The pfs says at or close to (enter dollar amount). Also, I believe after 30 days you can drop the price so that it they net 86%.

Permalink Reply by Jeanne Dominguez on January 2, 2011 at 6:54pm

Hi Edee, ATP is "approval to participate" in the FHA Pre-Foreclosure Sale (PFS) program. It is specific to FHA loans and basically gives the seller permission to sell their home as a short sale once they fill out financial information and demonstrate to the lender that they have a legitimate hardship. The lender will order title search and appraisal and direct you what dollar amount they wnat you to list home at and how much they will accept as their NET for an offer for a short sale. It's best to list the home first and start marketing it to establish some market value while the lender is reviewing the application.

To Amy, I have reduced it slightly, but it's still not low enough to generate an offer as the appraisal is flawed and too high. I am going to reduce it again this week, and hope an offer comes in, then fight for a variance.

Will see how it goes. :)

AMY GERRISH said:

Have you lowered the price at all? The pfs says at or close to (enter dollar amount). Also, I believe after 30 days you can drop the price so that it they net 86%.

Permalink Reply by AMY GERRISH on January 2, 2011 at 7:30pm

I think their bottom price is to net 84% Check your numbers and see how low you can go. Especially since the approval is expiring soon. And call them to see what your options are in a declining market with the appraisal.

Permalink Reply by Jeanne Dominguez on January 6, 2011 at 6:15pm

Update: Wells negotitator called me today to say that after the ATP expires, they will move file over for DIL (deed in lieu) and contact my seller to see if she will cooperate. It will take 60 days for DIL to be completed and if we can bring an offer during that time, they will cancel the DIL and return her to short sale status. She said they can accept the 84% of appraised value at this time. Will not order 3rd appraisal as it's against investor guidelines. (1st appraisal was fair market value, 2nd was above market value and is what I am stuck with after they dropped the ball and lost last buyer) I asked if we can apply for a variance if I can get them an offer and she said YES, but she wasn't sure if there was a certain mininmum percentage the HUD needed in order to approve the variance. Going to lower the price again and see if we can get an offer and then the variance if needed. I was reading HUD-90041 (their variance form) and it makes mention of needing a variance on values less than82% of appraised value....so it seems like we can go between 82-84% safely??

Permalink Reply by AMY GERRISH on January 6, 2011 at 6:18pm

Lower it! All they can say is no. At this point the wait won't be long for a buyer.

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