The seller's lender has to order either a BPO (Broker Price Opinion) or an Appraisal to determine the value of your Jacksonville short sale property and whether your short sale deal should be approved. When an FHA loan is involved (seller's loan) then the appraisal is done up front and you are given the value that the bank must have to approve the deal.
In a short sale a valuation is required by both the seller's lender and the buyer's lender. This used to be relatively simple part of the process. Recently, BPO and Appraisal values have become quite problematic in the Jacksonville Real Estate market for short sales.
We used to love having the lender order BPOs instead of appraisals on our Jacksonville short sales because agents who are actively selling in the Jacksonville real estate market usually have a good handle on fair market value. We used to see BPOs coming in at or below the contract price. Appraisals, on the other hand, often came in too high.
This has all changed. There is no predictability anymore when it comes to the valuation of the property by an appraiser or BPO agent hired by the lienholder.
Here are a few of recent examples of valuation problems with our Jacksonville short sales:
- Seller's lienholder appraisal comes in 20% higher than the Buyer's Bank's appraisal. Buyer's bank won't lend on the property at the price the lienholder mandated.
- BPO agent values a property $75,000 higher than the contract price. Property could not even be sold at $20,000 higher, which was the starting price. Comparable sales support contract price. Marketing history proves that the BPO is highly inaccurate.
- BPO agent values a home $30,000 too high. The marketing history on the home supports that the home could not be sold for the BPO price.
We are, of course, fighting the BPO and appraisal determinations in all of these cases. When you have a good bank negotiator you can usually get a new appraisal or BPO ordered or at least file a challenge. When you have a bad negotiator at the bank your challenge might not go anywhere.
Jacksonville short sales continue to be a challenging, ever-changing area of real estate. Make sure you hire someone who understands the process and how to overcome the challenges involved in Jacksonville short sales if you will be buying or selling a home that is underwater on the mortgage.
Right on point. There is no substitution for experience. Anyone who is selling short really needs to obtain the services of an experienced short sale realtor.
Posted by: Andrew | October 18, 2009 at 10:24 AM