How to Dispute a Short Sale Valuation That's Too High

Occasionally a lender's valuation of a short sale property is significantly more than what the market will pay.  As a broker you may have recourse,  however, every lender has a different process for reevaluating value. The first step is to contact the lender and get a detailed overview of their value dispute resolution process.  You want to make sure that you are providing the lender with the precise information they need to consider a change in value.

The BPO broker or appraiser who sets the original value often does not have a complete picture of the property. When we request that a lender reconsider a home's value, we gather as much documentation as possible.  That includes comps, a summary of repairs needed, and contractor bids for those repairs. We sometimes pay to have our own appraisal done as well.

 

If the lender is unwilling to budge on their value, we find out when the appraisal or BPO figure expires and then work with the lender to order a new one. 

 

Bank of America is one lender who is making an extra effort to work with brokers. BofA has streamlined their process for settling valuation disputes during a short sale, making it faster and easier for brokers to get the bank to consider an alternate value. Get step-by-step  instruction on How to Dispute a Bank ofAmerica Short Sale Valuation.  

BofA launches faster way to dispute short sale valuations

Listing agents that disagree with bank valuations of short sale properties now have a new option. Bank of America has streamlined their process for settling valuation disputes during a short sale, making it faster and easier for agents to get the bank to consider an alternate value.  

The value of a property is established by independent third-party vendors shortly after a short sale is initiated. If a listing agent wants to contest that value, this is the new process:

How to dispute a Bank of America short sale valuation

1. Tell your BofA short sale specialist that you would like a reconsideration of the value.

2. The BofA short sale specialist sends you an investor-specific, easy-to-complete form that specifies all requirements for a successful value dispute.

3. You fill out the form and attach specified evidence.

4. You can expect a value dispute review within 10-12 business days once all required information has been received.

Evidence you need to provide to Bank of America to dispute a value

When contesting a home value, Bank of America requires compelling evidence to support your claim. Here are the guidelines outlined by BofA: 

• Do not reference property pricing amounts in the narrative on the form. This violates appraiser independence policy and is against industry standards. Any reference to pricing will disqualify the dispute. 
• Provide comparables that are recent, proximate (nearby) and similar to the property in question.
• “Recent” means sold within 90 days of the actual value document date.
• “Proximate” varies by location. In a rural area, for example, a home five miles away could be considered proximate.
• You will be able to provide additional notes to highlight characteristics of the comps.

When the dispute centers on property condition or hazards:

• Provide an itemized estimate from a licensed contractor on the contractor’s letterhead.
• Provide photos to illustrate the repair, condition issue or hazard you want to highlight.

The above is a summary of the new changes. Your Bank of America short sale specialist can provide additional guidance about the process.