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hire appraiser during short sale

Short sales and unrealistic price expectations

October 5, 2012 By Ryan Lundquist Leave a Comment

Sometimes banks just won’t budge. Obviously banks want to minimize their losses during a short sale, so they want top dollar. But there is a difference between a high price and a totally unrealistic price.

An “unrealistic” example: I was hired by a real estate agent to do an appraisal on a listing in Natomas. The bank wants $250,000 for this property, but there have been zero sales at that level over the past four years. I just talked about the power of trend graphs, and this graph below really “brings home the bacon” in that it helps illustrate how out-of-touch a price at $250,000 is for the neighborhood. However, if the bank was looking at sales with standard lot sizes instead of tiny lots like the subject, then I can see where they are hoping for $250,000. This underscores the importance of knowing a neighborhood market and how a glance at “comps” doesn’t always work out so well.

Example of Bank Value during Short Sale and appraised value - by Sacramento Appraisal Blog

Should you hire an appraiser during a short sale? My advice is to negotiate with your bank first. Why spend money on an appraisal if your negotiations will work? However, if the bank is being unrealistic and will not budge on their price, it may be worth giving a local appraiser a call. You might even ask the bank if an appraisal would help. Keep in mind there is often a price difference between distressed sales and traditional sales. Additionally, the appraiser cannot be your advocate, but is instead a neutral third-party hired to render a value opinion.

I wish you the best. I know it’s not an easy process, and I do not take that lightly.

Questions: If you are an agent, are you finding banks to be in touch with the market for the most part? Any advice to give to home owners? If you are an owner, what has the short sale process been like for you?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

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Filed Under: Appraisal Stuff, Resources Tagged With: appraiser in Sacramento, bank wants too much money, bank won't lower price, distressed sales, example of bank wanting too much for property, hire appraiser during short sale, Home Appraiser, House Appraiser, Natomas graph of sales, should you hire appraiser during short sale, unrealistic price from bank

You’re trying to sell, but the bank won’t bring the price down during a short sale. What can you do?

February 24, 2011 By Ryan Lundquist 3 Comments

Sometimes banks seem cooperative when handling short sales and other times they don’t seem to want to budge from a certain price level – even if that price is above market value. Let me give you a real scenario so you can see this phenomenon at work and also how a BPO and appraisal fit into the story. I’ve included some tips below too.

Real Short Sale Scenario: The bank has stated they’ll accept a price for a Sacramento property at $200,000 based on a BPO. A “BPO” is a “Broker Price Opinion,” which is a valuation by a real estate agent (broker) of the subject property. This can be done from a desktop or a full interior or exterior inspection. In this case, I’m not sure what exactly was done or when the BPO was completed either, but the Listing Agent trying to sell this property ordered a full appraisal from my company to help show the bank what true market value looks like. The hope from the agent’s standpoint is that the bank will budge on their price. This particular agent orders appraisals from me regularly, so obviously this bank listens.

BPOs and Appraisals: Let’s back up for a second. Sometimes banks are ordering both appraisals and BPOs behind the scenes so they are equipped to make decisions about their inventory. The bank mentioned above is not ordering appraisals though, so each bank obviously has its own practices. Clearly banks want to minimize their losses, so they don’t want to accept an offer far below market value (well, you’d think). As an appraiser, I have banks hire me directly to help them decide on whether to accept an offer or not. In these cases my appraisal has nothing to do with the buyer or the buyer’s loan either, but it’s all about the current loan on the property (loss mitigation). On the other side, I do appraisals for real estate agents and home owners who are trying to doing a short sale. They hire me when the bank is seemingly out of touch with the market and only willing to accept offers far above real market value. Maybe the bank is relying on bad information for pricing or an outdated BPO or appraisal?

Crunching the Numbers: Put on your appraiser hat with me and look at the graph below. Does $200,000 maybe look high based on all recent model match sales and listings? The last sale above $200,000 was in 2008. The most recent sales are right around $180,000 or below, and the most recent listings are between $150,000-$160,000 with a clear trend downward. Whenever you see listings priced lower than recent sales, it could indicate aggressive pricing, a further decline in value, slow Winter months maybe, or possibly some external factor (economy, job losses, environmental disaster…). It’s always important to ask why listings are priced lower than the most recent sales, and decipher what that says about market value – if anything. In this case, the most recent sale in January actually had a contract date back in October, and the market has since declined a bit and softened due to Winter months. The current listings are actually a pretty good example of what buyer’s are willing to pay right now (slightly agressive pricing though).

If you’re in a situation as a home owner where you are trying to do a short sale, but the bank seems to not be cooperative to lower the price (if it’s legitimately too high), here are some tips for you.

  1. First off, make sure you are working with a local real estate agent. It’s nice that your cousin in San Diego is a Realtor, but does your cousin understand the local market in Sacramento? No offense to your cousin of course.  🙂
  2. Make sure your agent has knowledge of the market area and a proven track record of short sale success. Everyone and their mom is a “short sale expert” these days. Just make sure your agent is equipped to really work hard to get results. There are so many good agents out there, and if you’re in the Sacramento area, I’m happy to point you in the right direction to someone trustworthy.
  3. If the bank absolutely won’t budge on their price and you’ve exhausted other resources, it may be worthwhile to order a full appraisal to help illuminate true value. Think about this and talk with your agent about this option. Let me know if you have questions too.
  4. Local agents say that short sales have been far easier to negotiate these days in comparison to several years ago. However, keep in mind that they are still difficult in many cases. I don’t want to deflate your optimism, but it’s important to be realistic that short sales don’t work out every time. Just do your best to really exhaust your options, work with a great agent, and don’t lose hope – no matter what happens.

What do you think? If you’re going through a short sale right now, I’d like to hear about your experience. Do you have any other tips you’d give to home owners about how to help the short sale process go as smoothly as possible?

If you have any real estate appraisal, valuation consulting, or property tax appeal needs, contact me at 916.595.3735, www.LundquistCompany.com or via Facebook.

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Filed Under: Appraisal Stuff, Market Trends, Resources Tagged With: appraisers in Sacramento, are banks cooperating with short sales, BPO, Broker Price Opinion, hire appraiser during short sale, Lundquist Appraisal Company, Real Estate Appraisal in Sacramento, Real Estate Appraiser in Sacramento, sacramento appraisers, Sacramento County, Sacramento Real Estate, Sacramento short sales, short sale process, short sale tips for home owners

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