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Published on Feb 25, 2010
http://www.DavidPriceRealtor.com. What are the banks thinking today? Banks are more conservative than ever and are forcing property values down in stable neighborhoods.
I understand banks trying keep their equity position high and prevent further losses, but allowing appraiser to use "Short Sales" as comps in a an arms length transaction is crazy.
Buyers who buy short sale homes are looking for a deal and they often get one, discounts as much as 10-30% or more in some cases, Ive seen banks sell homes to investors who then flip the home and make a profit so I know what is going on. Freddie Mac has a policy that they will accept an offer on a short sale if its within 77% of the BPO or appraisal value, which is great for the buyer who has waited 4-9 months to get an answer from the sellers bank.
Where this breaks down is the poor homeowner next door, who has been paying his mortgage on time for years, and now, his property value just got flushed because appraisers are told to uses these short sales and not make adjustments.
Banks are missing the big picture, right now homeowners who maybe upside down with their property values, but are making payments are thinking and being advised to stop making payments, take a hit on their credit and get out why so many others are doing the something!
Appraisers need to not use short sale or make an adjustment anywhere from 10-30% so they dont bring down values of non short sale homes anymore!