A Fannie Mae REO lost b/c they wouldn't lower the price, after the FHA appraisal came in $12000 under. Demanded homepath, Anyone with similar

Asked by Erica Texada, Realtor, MIDLOTHIAN, TX Thu Mar 22, 2012

issues? Fannie Mae wouldn't allow an amendment for lowering price. It was discovered that the listing agent used comps from a different city and county to justify the higher price, after further review the neighborhood had 6 available comps. Fannie Mae ignored along w/the agent and demanded my buyer go fannie mae homepath financing or conventional. My buyer declined b/c they didn't want to buy a home knowing they were upside down in, as soon as they opened the front door. Also, bring additional funds to closing. Is this predatory?

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Marie Souza…, Agent, Centerville, MA
Thu Mar 22, 2012
We haven't had this problem, but have had "appraisal" issues with Fannie Mae who is using comparables from a drive by BPO to determine a selling price. The local bank here did an independent BPO (interior/full) which came is $30,000 less than (this is the correct current value) their BPO & they won't budge.
It's really too bad. They seem to be doing whatever they want with short sales right now.
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T.E. & Naima…, Agent, Dallas, TX
Thu Apr 5, 2012
A BPO or an appraisal is someone's guess as to what a willing seller and a willing buyer in a normal market transaction would agree to. That's poppycock.
Things haven't been normal in so long my brain hurts.
A willing seller wouldn't be FNMA.
A willing buyer would pay as little as he possibly could.

Appraisal is more like the TrueCar.com site shows car prices. There's a curve (no, it isn't a bell curve) that runs from overpriced to a great deal. Houses are the same way. There is no magic appraised value. Get 500 people to give a value and you'll get at least 363 prices, a bunch of people will give the same values, but that doesn't make them right.

Try this website to see the curve I'm talking about:
-you might have to put in a zipcode to make it work.

So, just because the FHA-approved appraiser says X, does not mean that X is the true value. I would expect X to be somewhere in the middle of the curve (anywhere in the blue). Sometimes the value is not where it's expected. The bad news for the seller (FNMA) is that the FHA appraisal is valid and sticks to the property for 6 months. Only a re-appraisal can remove it.

I am not saying that the FHA appraisal is too low, by the way. The fundamental problem is that appraisals give a single number and the truth is it's a range of valid values, some more likely than others.
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