As we have discussed previously, a short sale requires a market price offer based on the ‘sold comps’ of that neighborhood. The servicer usually sends a real estate agent to the property to do an interior BPO or an appraiser to do a full appraisal in order to establish the market value of the property.
In August of 2014 I wrote an article about how Fannie Mae and Freddie Mac were moving away from BPO’s in short sales and starting to use more appraisals. They now seem to be doing an about face and marching in the other direction. On several of our most recent Fannie and Freddie files they have only done “drive by” valuations. In other words, a Zestimate from Zillow.com or even worse, a PFA valuation (Pull From Air).
Not unsurprising, some of these “valuations” are on the high end of the sold comp range. We are then forced to request an interior valuation. If they refuse do an interior valuation then we are left with pursuing a Value Challenge with the servicer. Our most recent Value Challenges on these files have seen some success. They require a CMA for the property and any other evidence of property value. I am hoping that the bank/servicers remain reasonable to our input on value in these instances. If they do, it may just mean that the servicers are shifting the burden to the Seller’s side to show market value and thereby saving them the cost of an appraisal or BPO. We will just have to see if this is the way they intend to go for awhile.