Question RE ARV And FMV
When you are presenting your case to the lender, do you base everything on current FMV? or ARV?
It seems if you use current FMV then you would not subtract repairs from this figure. Or if you use ARV you could then subtract repair costs.
Any advice would be nice.
I am assuming that you use the repairs to try to sway the banks opinion of what the FMV is.
Thanks
In a short sale transaction and negotiation, the only one interested in the ARV (after repaired value) is the speculative investor. Otherwise, it has no bearing and should not be mentioned.
The FMV (fair market value) is what the price the property would sell, today, in it's as-is condition.
The application of costs for deferred maintenance, functional obsolescence, etc, will have already been considered when determining the FMV when analyzing comparable market data.
Your role in the process will be to make your Proposal as factual and compelling as possible... to influence the lender's perception of FMV as well as other aspects of the lender's anticipated net recovery.
The lower their perception of value... the lower your acquisition cost.
[addsig]
SS Pro thank you for all of your help and advice on this forum.
As a follow up to the above qustion. So my best bet is going to be to present the lowest comps that I can find and then take into account the repairs and lower the avg value from the comps to offset the repairs? Is this correct? By doing this we are trying to get the bank to use our lower comps and then discount the home even more due to the repairs.
So the whole key is to be able to convince the bank via good comps that the FMV is lower than what they believe it is. By doing this and then discounting for repairs you create a good short sale opportunity?
Is this correct?
Also I tried to call someone who had done a BPO on a property that I am looking at. They told me the BPO was completed and that they could not discuss it with me. So I guess I need to get to them before they complete the BPO?
Thanks Again for all of your help.
It's best to meet the appraiser on site, hand the appraiser your homework (comp data, repairs estimates) and some location snapshots depicting deferred maintenance items... or worse.
You really can't discuss price with the appraiser in the field... but you can certainly talk about both physical condition, and market conditions... both which will impact value. Bring a flashlite.
Now I am getting confused.
Will there be an appraisal done? Or just a BPO?
I thought the lender did their own BPO. And most of the time by the time we get involved the BPO is already done. Should I request a 2nd BPO?
Should I have an appraisal done? I have a cash partner so we will not need an appraisal for a loan.
If there is an appraisal done who is the person requesting it?
Thanks Again
a lender asked to consider a preforeclosure short sale can have performed an appraisal, a BPO, or both.
Don't confuse the short sale negotiation with your own acquisition financing....
If you can accompany the foreclosing lender's appraiser (could be a real estate broker, or an appraiser or a broker who is also an appraiser)
on their interior inspection... that's best.
If you become involved after the fact, try to get a copy of the BPO or appraisal. If it's an FHA preforeclosure shortsale... the Seller would be entitled to a copy.
If you can't get a copy.. push for the loss mit rep to disclose the value.... then you'll know how much work you've got to do.
If you can compel them to order another BPO... make sure that you are there, doing your job to influence value.
Thank you for the clarification.
So the lender will typically order an appraisal in addition to the BPO? If this is the case I assume they would contact the homeowner to schedule the appointment and I could then find out from the homeowner when it is scheduled for?
Other than that I would have no way of knowing that they are doing an appraisal/BPO unless they told me before they did it? Is it customary for them to tell me this? Or do they just order it and see what happens for more negotiating power?
Either way I would need the homeowner to call me and let me know that someone had contacted them and when the appointment was for correct?
Thanks again for all of your info!
Multiple BPOs are ordered throughout the foreclosure process.. and, if warranted, an appraisal.
you really have no standing in the notification unless you are named by the Seller, or the Seller's Realtor as the contact person.