How To Value A Property Or Not – Short Sale 101

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.

Advertisements

2 Comments

Filed under Banks, short sales

2 responses to “How To Value A Property Or Not – Short Sale 101

  1. Pingback: Short-Sale Property Investing 101, Ranch Sale, Ranch Land

    • ladyrock

      Hi,

      You can certainly do a short sale if your property needs a lot of work or is in turn key condition. Many times we use property condition to help determine value. We often use detailed repair worksheets to help as leverage if a valuation dispute arises with the bank or servicer. Let us know if you have any further questions.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s