Your short sale was approved? Wonderful. The buyer’s lender under-appraises the property? Not so good. What do you do?
Do you call the short sale lender and tell them their comps were wrong? Do you scream “the market is still going down, take the new price or the seller will file bankruptcy”? Do you say “You’ll never get another buyer for this home”?
The short sale lender has heard all that before. Normally, they don’t care. You’re just another whining real estate agent. But there is a way to get a value changed if the circumstances are right. How? Factual errors. Here is an example.
I recently had a Fort Walton Beach short sale approved for $117,000. The house was a bit unusual. It had a 350 square foot detached apartment. The main home was 1350 square feet. The property appraiser’s office considered the home 1700 square feet – the total living area. Guess what? That is not what the buyer’s FHA appraiser thought. He only gave marginal value to the guest quarters, and primarily considered the home 1350 square feet. Thus, his value was only $99,000. That is 15% less than the contract price and approved short sale amount. That is all the buyer could get a loan for. The appraisal looked flawless to me. I knew the BPO agent likely relied on the property appraiser’s total square footage, though, and that is how I planned my challenge. Here is an excerpt:
Dear Sir or Madame:
1. FHA/HUD appraisal for this property has found a sizable square footage error that was not reflected in your BPO Value.
2. Public records states property is 1700 square feet, however, FHA/HUD appraisal measures home at 1350 square feet.
3. This difference is 350 square footage less than your BPO value and public records.
4. The actual and correct square footage brings the property value to $99,900 per current FHA/HUD appraisal.
5. Please consider the revision of your value to $99,900 to coincide with FHA/HUD correct measurements
The short sale lender, Green Tree, submitted my challenge to Fannie Mae. Two weeks letter they issued a revised approval for $99,000. The seller was thrilled. The buyer was ecstatic.
So next time you have a value-related issue on a short sale, and you are confident you are right, do your research. If you can find a factual error in how you think the BPO was done, you may very well save your sale, and your seller from foreclosure.
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email Wendy: [email protected]