Although most lenders, for both deficiency and tax reasons, simply assume the prevailing bid at a trustee's sale is the fair market value of a property, Arizona borrowers are entitled to challenge that presumption under Arizona law. A.R.S. Sections 33-814(A) and 12-1566(C) allow borrowers/judgment debtors and/or guarantors to apply to the Court for a fair market value determination of the foreclosed property.
Of course, this is particularly important if the lender is seeking and entitled to a deficiency judgment, but may be worth doing even in cases where the lender elects not to pursue a deficiency or is precluded from seeking a deficiency judgment under Arizona law. For example, borrowers may want to consult with their accountant to determine the tax ramifications of a foreclosure and how obtaining a determination that a property is worth more than the foreclosure sale price may be beneficial.
In the event a fair market value determination is desired, borrowers should consult with an Arizona real estate lawyer as soon as possible due to very short limitations periods that may require that such a request be brought within a couple months of the foreclosure date.