When does a seller wish their property to be worth LESS? It’s sort of a trick question but not really. We’ve been privy to some recent short sales transactions where the bank (in this case Wells Fargo) claims the value of a property to be one amount and the seller and real estate agent claim a value much lower.
For some time, we’ve heard that banks have issues with valuation. No big surprise. They continually think that there REO or their Short Sale properties have a value significantly higher than reality.
In these recent cases, the people at the Wells Fargo short sale escalation department have only allowed the agents to challenge the value using only regular sales. The agent can’t use any REOs or Short Sales to determine value. Anyone can skew value. Say we created a BPO for a condo in Las Vegas. We could certainly find 3-6 regular sales in an area and ignore the values for the 94 REOs and Short Sales. This exact logic that Wells Fargo, Freddie, Fannie and other big banks continue to use represents just another segment of how the system is broken.
If we read through the banks’ valuation guidelines perhaps we would see “cherry picking” alongside “obtuse thinking” within the text.
If the banks and investors continue this idiocy then the distressed property situation for homeowners will only get worse not better.