If you have completed more than a handful of short sales, then you have likely have been involved in a value dispute with the short sale lender. During the course of the short sale, the short sale lender sends out another Broker to complete a Broker Price Opinion (BPO) for the short sale listing. The bank then, in most cases, bases their price on the value stipulated in the BPO. However, often times, there is a discrepancy between the value stipulated in the BPO (what the bank wants) and the offer amount (what the buyer wants to pay). In many cases, what comes next is a valuation dispute. And, at some lending institutions, this is much easier to complete than at others.
Bank of America has recently revised their process for addressing valuation disputes that arise during the short sale transaction.
Here is an outline of the new process (courtesy of our friends at bankofamerica.com/realestateagent):
- Tell your short sale specialist that you would like a reconsideration of the value.
- Receive an investor-specific, easy-to-complete form from your short sale specialist that specifies all requirements for a successful value dispute.
- Fill out the form and attach specified evidence.
- Stay in touch with your short sale specialist for results.
- Expect a value dispute review within 10-12 business days once all required information has been received.
Here is the evidence you will need in order to support your valuation dispute:
Provide comparables that are recent, proximate (nearby) and similar to the property in question.
- “Recent” means sold within 90 days of the actual value document date.
- “Proximate” varies by location. In a rural area, for example, a home five miles away could be considered proximate.
- You will be able to provide additional notes to highlight characteristics of the comps.
When the dispute centers on property condition or hazards:
- Provide an itemized estimate from a licensed contractor on the contractor’s letterhead.
- Provide photos to illustrate the repair, condition issue or hazard you want to highlight.
If your valuation dispute relates to condition and significant repairs are required (which would lower the subject property’s value), it’s best to have multiple bids in order to support your position. Based on my experience, I can tell you that you should not expect the bank to pay for items such as new carpet because there is a small stain on the living room floor. Big stuff, legitimate supporting documents, and a strong will to succeed could lead to success in a short sale valuation dispute.