How to Dispute a Short Sale Bank Valuation

Short Sales can be made or broken by what the bank determines the subject property value at.  If the property value is too high, you’re going to have an uphill battle or a slim chance at getting an approval.  So what should you do if your negotiator is telling you the lender wants an offer around $350,000 and you didn’t even get a showing until you dropped the price to $299,000?

I always find the person, other than the homeowner, that knows the most about the property is the listing agent.  Whether it’s a New Hampshire short sale, Massachusetts short sale, Maine or Rhode Island Short sale you should first, make sure you attend ALL Short Sale BPO’s or appraisals scheduled on the property.

If the bank valuation is too high, the BPO agent or appraiser maybe didn’t know or understand all the intricate details related to the listing that you did, so you have to show the bank what you do know.

Make sure you attend ALL BPO’s or appraisals scheduled on the property.

If the bank valuation is too high, the BPO agent or appraiser maybe didn’t know or understand all the intricate details related to the listing that you did, so you have to show the bank what you do know about the short sale property.

First, tell the bank negotiator that the value is too far off and you would like to dispute the value.  Each lien holder is a bit different in their requirements, but the following list will help you show the bank that the value may be askew.

1)      Write a great cover page – explain how long the property was listed, how many showings you had, when you dropped the price, explain any feedback you have received, and then start to tell them exactly what you know about the property.  Is there mold?  Do all the utilities function properly?  Is the roof old? Is the neighborhood sketchy? How many offers did you receive?  What you should do is a detailed letter of all the issues you know that affect its current value.

2)      Pull comps within a 3 mile radius.  You should have at least 3 closed and 3 active comps

3)      Include a map that shows the comps and their proximity to the subject property

4)      Include a CMA

5)      See if the buyers will lend you their inspection report, get a construction estimate, or utilize the buyer’s appraisal if they are financed.  If the buyer’s appraisal came in at $300,000 and they are getting a loan for $290,000, chances are a value of $350,000 may be pretty out of touch.

6)      Include pictures.  I work with an amazing agent on the Cape in Massachusetts who has TWICE sent in such an informative packet for her short sale that we received an approval almost a day after we submitted her information.  She documents EVERYTHING with the property that affects value, takes her own pictures and labels EACH picture so the lender knows exactly what they are looking at.  She now does this UP FRONT as she takes the listing, and since she started doing this, the bank valuation has continually been in line with a buyer’s offer.

7)      Get an appraisal.  If you don’t have one on hand, order one and submit it to the seller’s lender.

8)      Make sure you research WHO is valuing the property.  A BPO agent five towns away may not have the knowledge you do about the property.  They may be an REO agent thinking they will get an opportunity to LIST this property, should it go to foreclosure which is clearly a conflict of interest.  These are all things that you should know.  We once had an agent who listed REO properties in Lowell, Massachusetts show up to our Derry, New Hampshire listing. Of course the valuation was so far off.  If you find out any of these things, notify the bank negotiator immediately.

9)      Send them any other liens on title.  Now realistically this doesn’t affect the value much, but it does show that a property may be very difficult to sell which DOES affect the value.  We worked on a property in Massachusetts with over $30,000 in liens, and executions, including tax liens, town liens for utilities and credit card liens.  The primary lien holders should know what you are up against.  Most pull title as well, but having a local attorney or title company pull title will save you a LOT of headaches.

Making sure you have drawn a detailed and accurate overview of your listing will assist in disputing a value which is much too high for your property.  It may not save the short sale, but you’ll be able to sleep at night knowing you provided the strongest information possible to the lender.

Maryann Little, VP Mitigation

Short Sale Mitigation, LLC
AA Premier Properties, LLC
Massachusetts Short Sales
New Hampshire Short Sales
The Short Sale Closer!

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