Short Sale Appraisal Process May Be Required By Lender

Q: We are closing on a house next week. It’s a short sale in a nice neighborhood at a huge discount. All the papers are in order.

The deal went smoothly but took 8 weeks. The seller’s bank wants a copy of the appraisal from my lender that I paid for. The seller’s lender is not paying any closing costs or putting anything into the deal.

Do I have to send them the report I paid for?

A: You don’t have a legal obligation to provide the bank with your appraisal, but then again, the short sale lender has no legal obligation to allow the short sale to go forward.

If you don’t provide it, the bank may not agree to let you close on the property. If you do provide it and it shows the value of the property is way above what you’re paying, the bank maybe try to pressure you into paying more money.

Many short sale lenders request a copy of the appraisal that was obtained by the buyer when they go through the sort sale process. In some cases, the short sale lender may have obtained its own appraisal of the home but wants additional verification as to the value of the home.

If your appraisal is at or about the price that you are paying for the home, the bank can use that information to reassure the investor that may have to take a loss on the short sale that they should allow the short sale to proceed.

However, if the appraisal is way above the purchase price for the home, the short sale lender and the investor may suspect that the buyer may be taking advantage of the short sale lender and the short sale lender or investor could request that the buyer bump up the purchase price to close on the home.

While you may be paying most or all of the costs to purchase the home, you need to remember that if the short sale lender and its investor are taking a big hit in allowing the short sale to proceed, that short sale lender and investor want to make sure they are getting the most out of the sale. If your appraisal is at about the purchase price and you provide the appraisal, you can only hope that the short sale lender comes back shortly with an approval on the sale.

With a short sale, the bank holds all the cards. If you want to get the deal done at the price you offered for the home, you’ll have to play by the bank’s rules. For more details, consult with a real estate attorney.


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