Janna Rankin Scharf, GRI, SFR, CLHMS - Coeur d'Alene Idaho Short Sale Realtor
Short short sales make up a substantial percentage of all real estate sales in Coeur d'Alene, Idaho these days, and according to CoreLogic that number is projected to nearly double in 2012 over the record set in 2011. My personal business seems to bear that out as I currently have seven listings with contracts pending, and six of those are short sale transactions.
One thing I have learned is that the valuation
a bank sets for a listed property, establishing the amount they require in order to approve a short sale, is a figure NOT cast in stone.
When the bank has set a valuation too high for the market, it is possible for a good short sale agent to challenge that valuation and get it lowered.
I recently challenged the established values of three Coeur d'Alene short sales, and succeeded in getting the required net substantially reduced on all of them. All of these deals were salvaged and successfully closed. I'm challenging another short sale valuation right now. I am anticipating a reduction in the established value of about $20,000.
Twice, I successfully challenged the short sale valuation based on repairs needed. What I have found is that if the repair is something that the appraiser, or agent who performed the BPO (Broker Price Opinion), could have seen when they inspected the property, the lender will take the position that they would have already accounted for the needed repairs in their valuation.
But when a buyer's inspection turns up something substantially wrong with the foundation, roof or major electrical or plumbing system which would NOT have been obvious, they WILL reconsider their value based on repair estimates from licensed contractors. Lenders understand that the construction and systems of a home have to be sound in order for a buyer's lender to approve a mortgage for the property.
On the third Coeur d'Alene short sale valuation that I successfully disputed, I followed the process that is outlined here. This is Bank of America's revised process for contesting the value given a short sale. When the initial valuation came in, I wondered what comps the appraiser could have possibly used to substantiate a sky high price for which the house would NEVER sell. I was able to get a reduction in value of $19,000 on this property. Without it, the buyers couldn't have qualified for the mortgage needed, and the home would have gone to foreclosure.
In almost every short sale transaction there are curve balls that come up which could not have been anticipated. It's important to have a skilled and tenacious listing agent who understands how to negotiate short sales and get over the hurdles that pop up. I can't stress this enough.