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Should you get an apprasial during a short sale?

January 5, 2011 By Ryan Lundquist 4 Comments

I am hired periodically from local real estate agents and home owners to do an appraisal during a short sale situation. Sometimes a bank will absolutely not budge to accept an offer lower than what they deem to be acceptable (even though their price is way too high), so the Listing Agent or home owner will hire me to do a full appraisal. The goal for the agent and owner is to show the bank what true market value is so that the sale can hopefully proceed at a more realistic price based on the market rather than a number the bank has picked. For example, if a bank says they will accept $200,000 for a property, but all other sales are at $175,000, a solid appraisal could potentially give the bank a realistic view of the market and thus help the home owner avoid foreclosure.

Should you hire an appraiser during a short sale situation? My advice is to first attempt to negotiate with your bank. Don’t spend money on an appraisal if you don’t have to. If the bank will absolutely not budge on their price though, and your sense is that market value is really lower than what they are saying, then it’s time to hire a local and experienced appraiser to provide you with a credible and detailed appraisal. 

Here is an example of some graphs below in a Sacramento neighborhood based on research I did during a short sale for a 2-bedroom house. All offers on this property had come in 10-15% lower than the bank’s approved number, but the bank would still not accept a lower price on this property. 

As you can see in the graphs, over the past few years and recently, the 2-bedroom units have tended to sell at the lowest end of the market. In this particular case, the final appraised value ended up being about 10% less than what the bank was willing to accept, which is very helpful and relevant information for the bank to consider. When dealing with a huge number of short sale and foreclosure inventory, a bank will not always be in touch with market trends, particularly when something like bedroom count might make a huge impact on the value of a property.

If you have any questions or a need for an appraisal or consulting in the Sacramento area, give me a call at 916.595.3735, send me an email, catch me on Facebook, or see my company website at www.LundquistCompany.com.

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Filed Under: Appraisal Stuff, Resources Tagged With: appraiser in Sacramento, avoid foreclosure, bank won't accept lower price, Foreclosure, hire an appraiser during a short sale, Lundquist Appraisal Company, REO, Sacramento Real Estate Appraisal, Sacramento Real Estate Appraiser, Short Sale, short sale offer

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Comments

  1. Forest Bush says

    January 6, 2011 at 2:04 AM

    Determining the short sale appraisal of property you have under contract is one of the most important aspects of the short sale business. Without knowing the short sale appraisal value of the property you are interested in, it’s impossible to formulate your offer to the short sale lender without knowing the home appraisal value of the property you are interested in. Knowing the appraisal value of the property is just as important to the loss mitigator at the bank.

    Reply
    • Ryan Lundquist says

      January 6, 2011 at 2:36 AM

      Thanks for the comment, Forest. I think you’re right. There are definitely several parties who need to know the value of the property. It looks like you are a bankruptcy attorney locally too, so I bet you run into short sale situations quite a bit. Keep me in the loop if you ever have appraisal questions. I’m always available for questions and such. Take care.

      Reply

Trackbacks

  1. Tweets that mention Should you get an apprasial during a short sale? | Sacramento Appraisal Blog -- Topsy.com says:
    January 5, 2011 at 10:40 PM

    […] This post was mentioned on Twitter by Don J. Lowe, Ryan Lundquist. Ryan Lundquist said: Should you get an apprasial during a short sale? http://j.mp/fqXHLE #shortsale #sacramento […]

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  2. Yes, you can still refer business to me despite HVCC | Sacramento Appraisal Blog says:
    January 10, 2011 at 5:49 PM

    […] 5. Appraisals during a short sale: Sometimes a bank will absolutely not budge to accept an offer lower than what they deem to be acceptable (even though their price is way too high), so the Listing Agent or home owner will hire me to do a full appraisal. I wrote a full post on this topic here. […]

    Reply

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First off, thank you for being here. Now let's get into the fine print. The material and information contained on this website is the copyrighted property of Ryan Lundquist and Lundquist Appraisal Company. Content on this website may not be reproduced or republished without prior written permission from Ryan Lundquist.

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