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Bob Georgiou's Blog

By Bob Georgiou | Agent in Walnut Creek, CA

When is the value of a home NOT what a buyer will Pay?


When you're buying or selling a short sale... I'm actually not sure this is a bad thing to be honest.

On a recent short sale my contact at the bank let it be known that when attempting to detemine market value THEY will not allow agents doing BPO's to use foreclosed properties to set value. In this instance it was problematic. There were no comps otherwise and the like comparables were different character. Advice to agents, if you ahve this problem request a formal appriasal.

I was thinking about what sort of flawed market manipulation this was until today. Competing homes in an area I farm are in freefall for no appearent reason. So there were some regular sales in the area recent closings at 599k, several in fact. At the beginning of the year there was a sale at 725k, until a self proclaimed short sale specialist came in and took a regular sale of a similar home at 640k. That sold right away, then the market held solidly in the high 500's. With pendings still in this range the market seemed to settle. But then a forclosure came on at 499k. A couple regular sales went into contract in the mid 500's and new short sales came on at 510k, 499k, 475k. The 475k short sale moved fast and a new short sale listing now came on today at 449k. At these prices Walnut Creek homes are now listed below similar priced homes in nearby Concord, an area whose median income is significantly less than affluent Walnut Creek. This sort of salesmanship is simply not good for us since one aspect of our job is to provide value for our services. If the home selling population just wants to sell price, why do they need agents?

After the initial rush of anger at the bank, I am now more sympathetic about the banks policy of considering short sales more like regular sales than foreclosures.
 

Comments

By Fran Rokicki,  Sun Nov 14 2010, 17:45
I have had banks that will not look at an appraisal, only the bpo. One the short sale goes to strict foreclosure, the attorney's office, does hire an appraiser. Sort of, backwards? It's a huge mess that they are creating. I think that this mess will affect our markets, for years to come.
By Bob Georgiou,  Mon Nov 15 2010, 12:06
Conceptually I agree, The systems the governmnet put in place to maintain the integrity of the banking system have ahd the unintended consequece of hurting AAA credit owners in distress. While the buy and bail NINJA deadbeats who flocked away early and often will now be in a place to capitalize on the protracted downturn. It's sickening.
By John Souerbry,  Tue Nov 16 2010, 03:00
Part of the problem with big banks that do mortgages is that whoever is at the controls is probably not a real estate person and doesn't understand the effects of the deals they do upon prices in micro markets. They are often shooting themselves in the foot - and making it hard for us to help them. I want to give them the the Jerry McGuire line - "help me, help you........ ."

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