Is a short sale even worth attempting if you are the first in the neighborhood?

Wow that is a lot of response! I agree with the appraisal solution.  Good Luck!

I have been doing BPO's and I know the BPO guy who did your short sale cannot get comps in your area so he/she has to go beyond the distance requirement as they can't get comps there. The neighborhood he/she used may not be comparable to yours. Sometimes bank or AM'S have guidelines that they want your projected value to be within the closed sales in the past 6 months. If there are no closed short sales in your area and it is not short sale or REO dirven it is hard to justify a low value. What they want is a fair market value. A full blown appraisal might be the answer. Good luck!!

Amy, that's very interesting.  It sounds like the lack of sales (short sales or not) in the neighborhood have put you and your clients in a touch position.  Please be sure to keep us updated as this deal progresses.  Hopefully, the bank will eventually allow the short sale to go through!

Amy- We have been the first short sale in many, many neighborhoods since we have been doing short sale for years. In the 90's it took 2 weeks to get a short sale approved. Those days are mostly gone. But those were all the only shorts in the neighborhoods. Now when the new wave of short sales happened upon Florida again, we were the first ones to close many short sales in particular neighborhoods. 

Some work out just fine and others were a fight to the end. We also have MAJOR bad BPO agents doing most of the BPOs and that is one of our main complaints! 

When it gets too tough, then we get a full appraisal. We also have fought and fought to get a new BPO and we have turned in many complaints of the poor job BPO agents have done on some of our listings. 

We have one that is going on 2 years. A condo. They keep sending out the same person who keeps going to the Ocean to get comps when our unit is NOT on the ocean You can not use those comps. Why would you pay for this condo the price you can get on the ocean for! Our seller on that one has not made a payment in 2 years and we are still getting offers, the offers get lower every 6 months and the BPO keeps coming in at the same price in a declining market in Florida! We fight and fight and one of these days, they will finally get it together. 

We have a 98% closing rate on our short sales because we don't give up. 

Get the appraisal. You will also need to get printed newspaper articles of the market conditions in your area. You making a chart is not going to work because that is coming from you. If you get it from the media, they believe that. LOL! Katerina

If the BPO makes complete sense to you, it's hard to see how a full appraisal would help.  Wouldn't the appraisal likely involve the same properties.  As for the situation, my favorite phrase today is "don't try to make sense out of nonsense."  It's really hard to accept that there are folks we want to help but perhaps cannot because the circumstances are beyond our control.  

Great writing, I like the little images you have in the post.

A BPO is a basic 15 minute glance at the neighborhood.  If you have sales in the last 6 months in the neighborhood, then the bank is right.  Why should they take an offer lower than what is selling?

That being said, if they went outside the neighborhood, you have to make sure the BPO (which you're not suppose to see) uses REAL comps.  The only thing you can do usually is call fowl.

Most banks will tell you what your offer needs to come up to and most buyers will raise their offer if they feel they are getting a good deal.

Fight ON!

Chip makes a good point. My thought is that is do not matter at all whether you are first in the neighborhood or not. What DOES matter is creating workability with the bank and that may or may not be possible. It's important to demonstrate to the bank that your offer is the best and highest and if the bank does not go with it, they will get less money down the road.

Good luck with getting it done.

Concrete data is what got these banks in to trouble in the first place! They let prices rise because the data said it should and now look where they are. This will be another home they get back in foreclosure and in a year when it goes on the market they will more than likely sell it in the $160,000 because the data says they should.

It shouldn't matter, but they may want to see that the home was marketed at a higher price with incremental price drops!?   Lack of sales in the neighborhood should not prevent you from getting a short sale done!  Best of luck with it!!

We recently closed a short sale that the bank hasd appraised at much too high a price.  OUr seller went to the expense of having another appraisal done which truely reflected the current price for our market.  You may want to do the same.  We actually closed the deal with an offer that was less than the 2nd appraisal.

It sounds to me like they just want to avoid making a decision.  This is more double talk.

Having dealt with many financial institutions over the years this type of thinking is standard procedure. The part of the bank that deals with short sales or liquidation of assets before foreclosure or repossession, NEVER talks to the department that actually liquidates the assets after repossession or foreclosure to find out the real value.

I'm by no means an expert on the short sale - this is a very interesting scenario.  I'll stay parked to hear what others have to say - thanks for sharing your situation!

When someone finds a bank that has a short sale process that has an ounce of logic involved, please post it for all to see - but I won't hold my breath.  The sad thing in all of this is, the people who are hurt the most in this ridiculous process are the surrounding neighbors who take the hit on market value when these homes eventually go to foreclosure instead.

Good luck with this listing - I hope it works out that you can get an actual appraisal to move things forward!

Since it is so early in the process, I would start all over with a new negotiator.  Who is the lender? 

Sometimes banks are overly stubborn and take the whole "i don't have an emotional stake" too far. I agree with others, have an appraisal done but you have to live with the consequences and the owner has to pay, which he may not want to do.

Hi Amy,

Mercy to the home owner who has experienced the foreclosure process. First off when you try to sell a short sale Realtors have to think outside the box. Especially before the scheduled BPO. Realtors always tidy up (spic and span the house) also make sure the home smells like vanilla. Now since the homeowner is trying to be free of any judgments and possibly walk away with fair credit. You have to use gorilla tactics. I am a short sale buyer/seller, and one of the first things required before the scheduled full  is to make the home seems unsellable without repairs. First be there 1hour before the BPO agent appears to make sure the scene is despicable. Second make sure the home owner is not there. Third if possible two days before clutter the house with junk empty beer cans, bottles with cig butts in them..all kinds of nasty degrading stuff. The kitchen should have a terrible burnt odor with old pans and dirty dishes. I'm referring to reverse staging. I am a hunter and for hunting purposes I buy smells that cover up human scent. I have a few throw rugs in-cased in special containers that will make eyes water. Smells like Coyote urine and skunk oil work very well. You want them to feel like they need rubber gloves and hospital shoe cover footie's. At the entrance to the home or near the entrance I smash a flower pot and dirt is spread about, mud here there. I have a cabinet maker that gives me dark wood saw dust I add water and miracle stains appear. See where I'm going.. The price always drops.. Clean up is pretty cheap. Sometimes holes in the wall work too.

Have fun with it and be crude, unflushed toilets with you know what. Bath tub filled with water food coloring in baby oil then draind leaves a nice ring. You will have thousands off the BPO! You have to follow the BPO agent take pictures and and exclaim about all the crap. Want to make money!

Sincerely

Wilton H.