Bias Appraisal and Home Equity Calculations

**Yellowfire1684** · 11-09-2009, 07:37 PM

Facts:
Appraised value: 345K
Loan amount: 267K
Sale price: 275K
Sale type: short sale
Loan interest: 30 yrs @ 5.5% (estimation)

Scenario:
Buyer puts an offer of 275K on a shorts sale. Bank counters at 325K and buyer requests a BPO. Bank supposedly does a BPO and holds firm to 325K. Buyer inquires if the BPO had walked through the house to gain sufficient observation of the house, and apparently that was not done. The BPO is done again with the agent walking through with the BPO person. The bank agrees to settle at 275K.

Since they "sat it out," some how their offer proceeds at 275K. I'm not quite sure how that happened or the details, but that's what I was told. Buyer then takes out a loan from MoneyTree Bank and has his friend, who is an appraiser, appraise the house at 345K. MoneyTree bank approves the loan for 267K. I would assume the difference was paid in the deposit.

What is wrong with this picture?

How would you calculate equity of this house from the scenario described?

**Greg** · 11-10-2009, 05:28 AM

Originally Posted by Yellowfire1684

Buyer then takes out a loan from MoneyTree Bank and has his friend, who is an appraiser, appraise the house at 345K.

Fact: this did not happen in this lending market. Lenders can not pick who does the appraisal anymore and there is no way a buyer can pick the appraiser. It would have to be a big coincidence for this to happen.

What makes you think it worked out this way?

**Yellowfire1684** · 11-10-2009, 11:14 AM

Originally Posted by Greg

Fact: this did not happen in this lending market. Lenders can not pick who does the appraisal anymore and there is no way a buyer can pick the appraiser. It would have to be a big coincidence for this to happen.

What makes you think it worked out this way?

What do you mean by "Fact: this did not happen in this lending market." ??? He closed at the beginning of October (2009). It happened already.

"...and there is no way a buyer can pick the appraiser." This too happened. It's a mutual friend of ours' who does appraising. It most certainly happened...already.

"Lenders can not pick who does the appraisal anymore" I would believe lenders select from pool of services they have listed, but I'm not a lender and don't think you are either and so there maybe something we don't truly know.