Value-Rite Appraisals Inc Blog

The last thing almost anyone thinks about in a preforeclosure position is spending more money getting a Valuation Specialist into the picture. Yet the use of an Appraiser prior to the foreclosure is an investment that is necessary to make a truly informed decision as to what actions to take. There is a saying that "knowledge is power," and many have walked away from tens of thousands of dollars due to the lack of knowledge that would be remedied by a complete, professional appraisal. Why does this matter? What the banks don't tell you is that in many states the overage of what is owed on the property (less legal fees) is to be returned to the last owner of record. So if you are in an equity position or have money in the house with an appraiser and a good realtor, you can do a short sale, get your money out, and avoid foreclosure.

But remember—a realtor is not an appraiser. In Florida, where I have my Appraisal Practice, it takes over 2 years and thousands of hours to become a Certified Appraiser. A realtor can become licensed in 4 weeks. Big difference! And I have seen many receive a BPO (Broker Price Opinion) or an Automated Valuation Model which not only doesn’t reflect on the actual value of the property, but could show the property at 10-15% below the actual value.

So the question is: what knowledge will you gain by obtaining an appraisal? First, talk to the appraiser and explain the situation. Normally what is done is called a sales appraisal, and is similar to the appraisal the bank will order. It covers the actual exposure that is typical for your house to sell in a 30 day period a 60 day period or a 90 day period, and what the opinion of the selling price will be at each of those time periods. Also, you will get an idea of what else is for sale and what is pending in your neighborhood.

Now you are at a point to make some decisions based on the amount due to your lender. In the best situation you will have lots of equity and your lender will let you know whether they will work with you or if you need to sell fast. The appraisal gives you an idea of what is happening in the market and what it will take to sell your house before it goes to the county steps for auction.

The second position is that you are what is termed "upside down" on your house. In other words, you owe more than the house is worth. Banks do not like to take losses, so call them and see if there is a way to work out a repayment. Much of this is dependant on what the situation is regarding the reason for the foreclosure. There may also be a legal remedy to the foreclosure and an attorney should be consulted.

With the high number of foreclosures that are presently on the market and are projected to hit the market there may be a way to keep your house and keep your credit. One other thing most people don't realize is that the investment wholesalers (the official term for the so-called "foreclosure vultures"), are in many cases loosely affiliated with the legal firms doing the foreclosure (Yes, it is considered a conflict of interest, but that is difficult to prove). As an appraiser who does foreclosure work, I have seen houses which have sold at 40% below the value of the property—only to be resold multiple times to end up with an investor who rents out the house for less than your old mortgage payment!

Don't let this happen to you. Call Value-Rite Appraisals Inc when you know you're going to have trouble. The sooner the better, because the longer you wait the less money you'll get back.