I have been selling homes full-time in Austin, Texas for over 11 years, and I had an experience this week that is a first for me. I thought I should share it here in an effort to inform others who might have this happen soon.
Before I get to the jist of this post, let me explain that I have had deals that didn't work out for a myriad of different reasons during my career, including:
-
- Too many repair items (i.e. bad inspection)
- Buyer lost job
- Buyer got cold feet
- Buyer got sued
- Buyer got caught money laundering
- Seller died two days before the closing
- Buyer had money stolen from his entertainment manager who fled the country
As you can see, I have had my share of losses, so the idea of losing a sale is not completely novel to me anymore.
However, I have NEVER lost out on a potential sale because of an appraisal issue. Unfortunately, I may be able to add this to my list very soon.
I have a home under contract with some past clients who wanted to upgrade to a newer, larger home over the summer. We looked at quite a few places, because they are relatively picky, and we landed on a terrific home on 1.3 acres with over 3800 square feet. It was built a few years ago by a very reputable builder and it had plenty of upgrades. The contract sales price was $377,000.
The initial third-party appraisal came in at $380,000, and everything was moving along nicely with regard to the financing. Everything was submitted to the underwriter, and we thought we would be closing in a couple of days from that point.
Not so fast, Jason.
Apparently, since the home is located in a "lower density" suburban area, it automatically triggered a desk review of the appraisal, which came in at $325,000.
This is $55,000 UNDER the original appraisal.
After looking at the review, it was obvious that the second appraiser used only ONE comparable sale to establish the value of this home. Additionally, the home that they were using was 715 square feet smaller than the home I am selling.
They adjusted the square footage difference at $25/s.f., even though every home in the area has sold for $97 - 115/s.f. over the past two years. This home was thrown out of the original appraisal because it is not similar enough.
How does this make any sense?
The neighborhood is filled with custom homes on small acreage lots, and the comp that the review appraiser chose as "most similar" (his words) sold for just over $100/s.f. with an almost identical finish-out. However, this home is worth a mere $85/s.f.?
A second desk review was performed, which also came in at the low price. Everything was submitted to a second investor (bank), and we are waiting on THEIR (third overall) desk review now.
It peeves me that I have a buyer that is imminently qualified to purchase this home, with 20% down, and we did our due diligence to establish the value. The home was originally listed at about $390,000 and we felt that was fair based on what is available these days. Now, we are at the mercy of someone who has likely never even visited the subdivision.
So, the upshot is that I am on the verge of losing a sale with a ready, willing, and able buyer, motivated seller, nice listing agent, solid financing, and six weeks of work all because of a (likely non-local) appraiser's opinion.
If this home were listed at the review appraisal price, it would likely receive 20+ offers in a matter of days. The "fire sale" price that they have come up with is simply not an indication of the value. We are stymied because there are not enough recent sales in that particular neighborhood.
Our mortgage guy told me that he has only had one review appraisal in the past three years, and THIS MONTH alone he has had 4 or 5 get flagged.
It appears as though we now must be more careful than ever about where we show properties, because of the lack of confidence that banks have adopted. Even though this community has sales in excess of $550,000, the banks are so skittish about collateral that they will not lend money on this property even when the loan amount is $25,000 less than their review appraisal indicated.
Sorry for the long post - I could go on, but you get the picture. I will hear the final verdict shortly, and I can find out whether I have lost my very first transaction over an appraisal. Not like I need the money or anything, right?
Thanks for your time. I welcome your input below.
If you enjoyed this post, why not connect with me elsewhere or subscribe via email?
If you're looking for a home in the Austin area, you can also visit my primary Austin real estate website at www.austintexashomes.com. If you're interested in social media training, visit 210 Consulting. Thanks!
I've lost a deal or two on appraisal. The appraisal review ordered by the underwriter is something I'm fearful of in every deal these days. I have to wonder if the bank just doesn't want to do your deal. By the way, could you take it to another lender?
Jason, will the seller adjust the price to the appraisal. I have had this happen. The seller has two choices and one of them is selling for less based on the appraised value. If he doesn't this same problem may happen again and again, it is not getting better. The other option is that the buyer kick in the difference I have had that happen as well. Maybe they could split the differnce, buyer puts in some and seller adjusts some. Had they too.
HOPE - We could have tried another lender, but this was delayed about 10 days already, and everyone has lost patience waiting. We are already waiting on the second bank to review the appraisal, and I should hear something very soon.
MIRIAM - Even though this is something they will probably have to face again, I can't even imagine the seller adjusting the price by $52,000, especially since they paid $325,000 for the house three years ago, and the values in this area have been steadily increasing. The buyer will lose all confidence in the property if a THIRD review appraisal comes in low, and they already told me this.
Jason, your so right. Things that we never consider in the past now are the challenges. In May I had five deal that did not close for one reason or another. I would like to know which lenders really want to lend right now. I had a similar case, the other an Appraisal issue. I was lucky on that one, the seller went with the appraise value because they had already move to Green Bay for the new job. It was a 60k hit.
FRANK - This seller moved out two weeks ago, just before our original closing date. I don't think they would be able to accept a hit like this, but time will tell. My guess is that all of us will be back to square one soon.
PAUL - Indeed. I look forward to your comments when you have a minute.
Good grief! I have a settlement tomorrow where the bank wound up doing three appraisals - and they all came in over the asking price! But why do they keep sending appraisers out to this house? I made certain they are not billing my client for them.
In your case, can the lender assign the loan to another mortgage company?
PAT - We are on the second bank already, so I have a feeling that a third institution would not help matters. Also, I think the buyers will likely just give up on this place (and perhaps on the idea of moving at all) if this one doesn't work out. I am really shocked at both the method that they used to determine "value", and the fact that they are making it so difficult. They are set to loan $300,000 on a property that is worth a minimum of $325,000. Why can't we make that work?
Jason, with the return of FHA I had an appraisal come in $3000.00 light two months ago even though the same home sold 8 months earlier for $10,000 more. Obviously the lender did not want to cover the whole 3% gift funds. 3 years ago we did not have that problem with FHA. Scarier still, the lender forgot how to do an FHA. As a side note, the on site agent and I worked out a net sales price with gift funds to be added, when we gave him the contract he thought they were making 3% more money, and informed the builder as such. Big mistake Lol.
Jason,
I wonder if this trend will make FHA assumables more enticing!!! Thanks, Fran
It's sad that your buyer might give up on moving all together is this deal doesn't fly. I just had that happen (over different lending problems) about a month ago - I lost almost $2 million in sales on that.
Jason, your story makes me feel better about my decision to take a 12-24 month break from realty. The banks were driving me insane with their absurd decisions and apparent lack of desire to loan any cash to anyone. Hope it works out for you.
Jason, I just had a transaction cancel in escrow due to a low desk appraisal - even though the formal appraisal was higher. The seller refused to lower the price and the buyer did not want to purchase a property at an inflated price. The desk appraisal is starting to be an agent's nightmare.
I haven't had an appraisal problem lately but they could be lurking out there.
It seems most sellers in our area are getting more realistic about pricing.
Fortunately I haven't had this happen yet, but other agents in our office are experiencing it. Good luck!
Jason: The is a horrendous experience to have to go through. That's quite a hit!! This sounds like we are headed for many challenges because the banks have tightened up so much. FHA gave me some grief a couple of months on inspections, but so far I haven't had a bad appraisal experience, yet. Thanks for the heads-up.
Great for the buyers, but the sellers must be devastated. Good luck on this one!
Sorry about your appraisal issues Jason. Unfortunately, review appraisals are nothing new. Unfortunately, some lenders appraisals don't even go out to the property. They do everything by computer and never look at the property much less the comps. But due to the pool of REO's these lenders have and the guidelines these lenders have with their investors, they are trying to make sure they're not drowning in homes that are "upside down". A little too cautious sometimes I agree. Sometimes you'd hope common sense or any sense would enter their minds when doing things like this. Hope it all works out for you my man!
Jason in my 22 years in the Real Estate business I have met some really stupid people that do not follow logic. I could nver say that bankers and appraisers could be excluded from this group :)
If your buyer is in love with the home, and knows it is a better value than the appraiser is giving, maybe they should look at paying more than appraised price...had that happen during the hot markets...not now though...and if the seller is motivated to sell, maybe they can meet in the middle grounds somewhere... It stinks that these other appraisers that arent even there are doing these types of things....what did they say to your local appraiser's review of the property?
I rarely have appraisal issues. The reason why we both can make that statement is that we are professionals and we do our homework and known the market value of the homes we are selling or writing offers for.
I used to work for an appraiser. Don't hesitate calling him yourself. Be prepared with your argument. They will probably listen because it is their opinion being questioned. I have been through this and it has worked for me if the value was really there. Of course, there were times it didn't no matter how many rings of fire I jumped through! Remember- Be nice! They argue their opinion all day, every day.
Good luck.
Jason... this seems to be happening more and more often lately. I have heard probably 3-4 similar stories just this month and I am seeing far more scrutiny involved in the appraisal process in general. I have a short sale listing that came to me from a seller who was a victim of fraud in her purchase of the property. The lender scrutiny is so tough that they have had 3 separate appraisals on the property before they would assign a value to it. I have never had more than one appraisal ordered by a lender, and on this deal I have had 3.
This has been happening around here as well. It's maddening. The banks are so skittish that they are under-appraising "just in case". What is interesting is that true market value is derived by what the seller is willing to sell for and what the buyer is willing to pay. Somewhere along the way the banks have lost sight of that simple fact.
Tight investor money=skittish lenders. The lenders don't see things the way we do...what happened in the neighborhood 6-12 mos. ago doesn't apply to now, the way they look at it. I guess here in TX we have held the declining values bug off as long as we could. It's a brave new world. Someone said it best earlier, maybe buyer/seller meeting in the middle somewhere.
Its usually at about this point where the seller and buyer begin eyeing both agents commissions and thinking thats where the gap can be bridged.
I had a deal with a full doc loan and 50% down and they STILL ordered a desk appraisal. The lender was only lending out half the value of the home! I was told it was just routine and thank goodness both appraisals made purchase price. Is there a way to demand that they actually set foot on the property and tour the comps? In my area, appraising sight unseen, as in a desk appraisal, is nuts!!
I'm sending you all my most positive thoughts on this one, J. You and your clients deserve this!
Jason, have you thought about submitting comps to the loan officer? Also why was it a desktop review vs a full walk? aj
GET US A HOME REALTY - I would imagine that we will definitely see a surge in FHA deals because of the down payment requirements. When the mortgage stuff first hit, we didn't really notice a big difference here, but now, things are simply tight everywhere.
FRAN - In a word, yes.
HOPE - They do not have to move, so I wouldn't be surprised if they just put things on hold for another year or so. This was the perfect property for their specific needs/wants.
MICHAEL - If I can't get the "clean" deals done, I may end up in the same boat at some point. Thanks for your comments!
LEOLINDA - Agreed. Nightmare is actually an apt description in this case. It hurts to do everything correctly, only to have some random person's opinion affect my commission.
JIM - This was my first experience like this in 11 1/2 years of real estate. That's why I thought I should warn others.
JAMES - I realize that desk reviews are not really new, but I have never had to deal with one in a negative way. I guess they were more like rubber stamps before? As you indicated, I don't think the banks' appraisers ever went near the neighborhood, much less the home itself. I also don't understand the adjustment at $25/s.f. when the comps have all sold for about $100/s.f. or more.
BILL - That kinda sums it up, doesn't it?
JER - There is a possibility of meeting in the middle, but I am not optimistic this time around. Both sides seem pretty firm that if it doesn't close tomorrow, it's over. With regard to the local appraisal, one of the banks asked him to add the comp I mentioned in the post (715 s.f. smaller), but he said that it would bring the value down a LOT.
RANDY - This is the first deal that I have been in jeopardy of losing over an appraisal, and every person that I have shared this with locally feels that the home is well worth the contract price. As you said, we are pros at this and we do our homework.
MEL - If that were an option, I would have already called. These desk reviews are conducted anonymously, so the mortgage broker and I have no recourse directly with the review guy. I wish I could call (or even meet with) the second appraiser, but this is not the case. Thanks for the suggestion, though.
STEVE - I guess it amazes me that banks are so afraid to lend money to a borrower with 700+ credit scores and 20% down. How are they planning to make money? Your story doesn't surprise me, based on what we are going through now.
KELLY - I was actually thinking of writing more on this post with regard to what true market value is (and you just nailed it on the head), but I opted to keep it shorter. The skittish nature of the financial institutions with regard to housing is scary.
CHUCK - You are correct. With regard to meeting in the middle, I don't think that either side currently has the patience for this, but time will tell.
MICHAEL - The commissions wouldn't even make a substantial dent in the difference in this case, so I doubt it will come up.
Jason: I feel your pain. I just closed on a similar transaction. The 1st appraisal came in at value, but for some reason, the appraiser felt it necessary to include the verbiage "declining market' in his report. Why he did this, I have no idea. As a result, it forced a Desk Review, which fortunately, came in at value. But it delayed the process, and caused undue grief. But at least we closed!d
ELAINE - I would love to demand the tour, but I am not particularly optimistic about getting the desk review appraisers out of their offices to look at the property. I am simply dumbfounded by the method that they used for the adjustment in this case, too. The 50% story you shared is more anecdotal evidence that there are further problems looming, unfortunately.
AJ - I have provided comps to the loan officer in support of the first appraisal, but this apparently didn't help with the bank very much for some reason. I still don't understand how they can justify a sales price of $85/s.f. when NOTHING has sold that low over the past 2.5 years. I don't know why it's just a desktop review. I was told that it was triggered because the home is not in a "high density" area, which I believe means that there are not a lot of recent comps. This particular area is the type of place where people build their dream homes and stay put, so most of the sales are not in the MLS because buyers are dealing with their builders directly.
The mortgage industry is ridiculus! They are making everyone with good credit and the ability to pay, pay for mistakes that the mortgage companies made when giving 100 percent financing to buyers with less than stellar credit.
APPRAISAL ISSUES COME AND GO. IT DEPENDS ON THE LENDER AND ON THE FINASNCIAL INSTITUTION.
Much luck and success.
Bill 631-563-7720
Hey, Jason. I hate to hear that. How can the second appraiser only use one comp? I wish you all the best and I will pray that this works out for you and your client, Jim
Jason it is out of control!!! The underwriters are making everyone crazy because they got caught with their pants down. Good deals are being lost because they are afraid of the deals that were made in the past. Sort of locking the barn door after the cow got out, no? Good luck on this and let us know how it works out.
Wow, it seems as if nothing is as it seems any longer. That is an interesting scenario you have. I wish you the best.
Texas is late to the party. This has been happening in Atlanta sporadically since 2006.
almost all of our appraisals are under review these days, and some are definitely deal killers.
Fraud, especially by unethical appraisers has led to this problem. Some zip codes here, such as
30310 will fetch TWO rebuttal appraisals not just one! Everyone from the appraisers to the banks is under pressure to make sure appraisals are in line with market activity, which means that many rebuttal appraisals are forcing prices down even in better areas.
You're very lucky fellow Jason. In certain urban areas of Los Angeles a revised form of redlining is practiced and lenders have been getting away with it for years.
If an address comes up in certain pockets of South Central Los Angeles a desk review is automatically triggered. 9 out of 10 times the value will be cut be by 20 to 25 percent, yet the lender will still commit to the requested LTV in the loan transmittal.
Deals fly south all the time as there is not enough equity to make the deal happen once the value is cut. I had one about 4 years ago and I've talked to others who have had more recent experiences and the same thing is happening. Luckily, I was able to close, however the was still a reduction of $15k we had to contend with.
We have a community called "The Jungle" where people are living in substandard housing and landlords want to repair the properties but the need financing. Banks won't touch the area.
Your situation seems like an isolated case, hopefully based on market conditions. The above comments were applicable in a loose credit market. Take comfort some of us face appraisal adversity daily in our practice. I hope your deal works out for you!!!
I've seen some appraisals come in a little low at times, but $50,000 low is a first for me! The landscape is definitely changing out there.
RICH - The desktop review guy used similar language, "Due to declining values across the U.S. and in Texas..." which leads me to believe that he is NOT local, despite the bank's protestations to the contrary. If he is in Texas, I don't think he is within our local market, as he clearly has no grasp of values here. I am hoping and praying for the best, but preparing for the worst.
LINDA - I couldn't have put it better myself. These buyers are just about as solid as they come, yet they are being penalized for previous errors made in the industry.
BILL - Yes, that is true, but this case seems absurd to me. I guess we'll know more today.
JIM - That was the same question that I asked. His review actually shows the basis of value on the one recent comp. ????
PADDY - That is a terrific analogy, and an apt description of what is occurring here. Thanks for your comments!
TIM - True. Things are changing quickly, and not necessarily for the better.
ATLANTA AGENT - Yes, I suppose we are late to the party, as you stated. Part of the reason that this has not happened here is because prices have gone up over the past couple of years, despite having less overall activity in the market. Austin experienced 9% appreciation last year.
FIND A NOTARY - Thanks for your detailed comments. I am thankful that I don't have to deal with this every day, so it puts it in perspective for me.
BRETT - I had one appraisal in 1999 that was $3000 low, and the buyer paid the difference. Since then, I have not had any issues, so this was a rude awakening for me.
My only question for lenders is where the devil was all this pragmatic lending a few years ago? They give money to folks with a pulse and a checkbook and then when they get their behind handed to them for it, they turn off the monetary faucet for everyone... even rock solid buyers. Greed followed by fear. Gotta love it. Good luck with getting that baby to closing.
Someone has to pay for all the fraud and predatory lending that took place in past few years. Lenders have to balance their books and that includes risk factors. I think your buyers should put the difference if they really want that property and it's so perfect for them. I am also very suspicious of those desk appraisers.
One thing that will trigger a desk review is if your property is set-up incorrectly in the AVM system (Automated Valuation Model) or there are missing check boxes by the lender's set-up person. As an account manager for a major lender who left the business silently it was quite common for set-up people to miss entries and a desk appraisal would ensue. You would hate to get that dreaded email.
One of my friends became the appraisal manager who enjoyed shooting the breeze with me. He even showed me how to use Google Maps and Yahoo Maps to preview comps. He gave me plenty of insight into how the AVM system worked and I subsequently would do my best to have the more experience set-up people put my files into the system. I wasn't easy as there was a chronically ordered list that new submission was entered on when they arrived via mail or fax. Set-up personnel were instructed to take files in order, so it was difficult to control whom set-up your files when hundreds of loans came in on a daily basis.
Jason, Things are a changing in Texas underwriting public perception.and in At the other extreme we have had two homes recently sell way under professional apparaisals recently. I can't figure it. The appraisals looked good but the buyers' agent in both cases just said they didn't buy the appraisals which were done before listing.
I just heard of that same thing happening down here...difference being that this propery was on Marco Island and came in 1 million dollars less than the sales price.....SERIOUSLY???? COME ON!
The newer/tighter lending standards will make this type of thing much more common.
The solution may be an FHA loan - at least in this area, FHA is not doing review appraisals and they're not designating areas as "declining" or whatever. Our lenders are telling us VA and FHA are the best options, in today's market.
Jason...
Lenders are more cautious than ever, especially those with few dollars to lend. They need the property to adequately secure the loan, so conservatism is the watchword. Let us know how this turns out!
It's part of the listing agent's job to explain how an appraisal can affect the sale of a property and refuse overpriced listings. Seller's need to know that even if a buyer wants to pay their inflated price, they may not be able to unless they have a large downpayment.
It's too bad the banks are overcorrecting on their appraisals too.
We are starting to see the same thing in Atlanta, but not such drastic price differences. With such a large difference I would be concerned about losing the Buyers. As a Buyers Agents I alwaysincluded an appraisal contingency to give my Buyers a chance to walk or the Seller a chance to lower the price. I hope you eventual make it to the closing table.
That's a sad story. I hope it has a happier ending. Please keep us posted...
Hi Jason - I can imagine the amount of frustration you and your buyer are going through. Just out of curiosity, what does the Zestimate say? :)
Jason, In my market, appraisal issues are very common. I've dealt with many. Some I was able to dispute and some we weren't but in all cases it was a royal pain in the rear. Not much you can do. The banks do not have to lend the money if they don't want to. I sure hope it works out for you though.
Good luck, Jason. Putting in so much time and effort to have the deal not go through is very painful on a lot of levels. We are starting to hear the "declining market" excuse around Akron, Ohio more frequently.
Jason -- Wow, not good. I have had to renegotiate the purchase price due to a low appraisal, but never had a situation like yours. Unbelievable!
I used to see that a lot when the market was real. They wouldn;t even want to argue with you...last minute review by the Sr. instead of taking the JR's. Big thing now so unfortuantely you'll have to get used to it.
Thanks for yout tasking the time to provide us with this information in the Active Rain network. AR is the new "cyber backbone" of the industry, and with it's uplink to Localism.com it will transfrom the marketplace. Agents who don't see which way the cyberwind is blowing are going to find themselves at a considerable disadvantage inside of three to five years.
Thanks for yout tasking the time to provide us with this information in the Active Rain network. AR is the new "cyber backbone" of the industry, and with it's uplink to Localism.com it will transfrom the marketplace. Agents who don't see which way the cyberwind is blowing are going to find themselves at a considerable disadvantage inside of three to five years.
Thanks for yout tasking the time to provide us with this information in the Active Rain network. AR is the new "cyber backbone" of the industry, and with it's uplink to Localism.com it will transfrom the marketplace. Agents who don't see which way the cyberwind is blowing are going to find themselves at a considerable disadvantage inside of three to five years.
Hopefully the bank can get it appraised. Have you called local appraisers to see how much they can get on a desktop appraisal?
Jason - Wow that's a bummer. I hope things turn out ok for you and your buyer in the end. Your story is a perfect story for some of those buyers out there sitting on the fence. If they continue to way too long, even if prices come down a bit more, they may not be able to get approved for a loan or even worse get a loan for the house.
Well Jason it is one more thing to be wary of now. I am glad that i have not run into that yet, but then again I am in South florida and we have our share of quirky, bizarre situations.
It's only recently that I've had to deal with low appraisal issues personally, but I'm hearing from so many of my local peers that everyone is on pins and needles for the appraisal for almost every transaction. It seems like a crap shoot whether you hit the number or not, even with solid comps to back you up. It's frustrating to everyone involved in the transaction and leaves a bitter taste in the buyer's mouth since they will forever wonder if they over-paid for their home.
I come from a background of appraisers and I myself, was one but pulled out to do sales because the mortgage brokers were demanding fraudulent appraisals and I refused to do them. Unfortunately, part of the mess is improper licensing and regulation as well as proper education and apprenticeship work for appraisers.
If a property is located in an area of decline, then the appraisal will be adjusted accordingly by underwriting. If a buyer is putting 5% down on a property, under conventional, and the area is in a declining state, then the buyer will be underwritten as if 100% financing because the value will be reduced by underwriting by 5%. Hence, 100% financing, and then what? More then likely the deal will fall apart.
If square footage differential is "x" per square foot, the appraiser makes an adjustment of one-third of that cost to reflect "market reaction". If the comparable property is within 100 square feet of the subject property, no adjustment will be factored.
Unfortunately, financing has gone back to the '80's with respect to underwriting guidelines. Appraising should have been monitored and appraisers were and still are allowed to get a license "for a quick buck".
We have more responsibility on our platters to monitor the appraisals, to make sure that the appraisers are qualified, to follow the underwriting status and if one thing changes from the date of contract until "clear to close" the deal could go south.
I just got the word today that one of my listings did not appraise. I have reviewed the comps and it appears the appraiser has given an equal weight to a foreclosure property as the two other comps that were owner occupied. So instead of bringing the value in between the two owner occupied properties they brought it in at the lower value of the foreclosure. Huh? So we have already agreed to split the difference and make the deal happen. It doesn't make much sense but fighting with an appraiser these days isn't worth the effort.
I just had a property that I sold and it came in 12K lower than sold because of foreclosure comps
These nightmares do happen. In this case, I'd be so angry just as you are.
Jason, in my 12 years real estate experience, I have had two that did not appraise. In both cases, the lender used an appraiser that was not even from Greenville, SC Area, so of course he did not know much about the neighborhood or area. The buyers paid the difference of $18,000 anyway, as they and their buyer's agent agreed he did not get it right. Those were both years ago and that has not happened recently. Let us know how it works out.
Oh my Jason... $55,000 less... that is a HUGE difference. I wish you the best in getting this one to the closing table.. Please keep us posted.
Alright, I'm back. After our discussion on the phone, I don't really have much left to add here other than I am confounded by the stupidity at play. The desk review irks me to no end. Some underwriter all of a sudden knows better than a trained appraiser who answers to the Real Estate commission. Why send the original guy out in the first place if the lender already knows that it is of a certain property type that will trigger an automatic review? What's worse, the first appraiser used a suitable number of comps and performed his job properly. The desk review based everything on one comp? Since when is that acceptable practice? And it was about 800 square feet smaller to boot? Utterly ridiculous. This simply strikes me as a nervous nellie lender who has already decided they would rather not lend the money. They should either stick to the properties that sit well with them or close up shop. If you don't want a 700+ FICO buyer with 20% down, buyer and seller who agree to a price, listing and selling agent who are confident with the value and an appraiser who values the property slightly higher than the purchase price ... go sell tacos. You don't belong in the mortgage business.
I'm curious as to what the tax appraisal is on the property. Sounds like they're coming in real close to that.
TO ALL - Thank you for your comments. I wasn't able to keep up with the comments today on this one. As a brief update, the new bank wants the appraiser to provide a few more comps within a 5-mile radius (apparently the first bank wanted comps within a mile of the house). I am waiting to see if the buyers will proceed, as they are concerned about the value now. With regard to John Novak's question above, I looked up the Zestimate, which is $361,000. Michael - The tax assessment is $358,000. I will know in the morning whether or not we are proceeding. If we do, it should close by Wednesday or Thursday of next week.
Geeze, 6 week's of work, I feel for you...I've ben working a short sale since last October...the other agent (male) and I are joking that if this finally closes next month...it's our "baby"...
I hope it appraises...next week!
Good luck to you!
Geeez, they're even lowballing the tax appraisal.
Michael - Lowballing by over $30,000!
Banks and appraisers are so cautious and concerned about the review some day in the future that they are being overly cautious now Good Luck.
If your on the buy side and the home doesn't appraise, you are a longshot to keep the client. I hope the deal goes through, send a follow-up email. Good luck
If I was the seller, I'd feel a bit sick right now.
I have seen appraisal issues on values before. Good luck on getting this worked out with the review appraiser.
I have seen appraisal issues on values before. Good luck on getting this worked out with the review appraiser.
I was just talking with a lender about the long timeframe from the appraiser going to the property to the lender receiving the completed appraisal. I guess that I should be thankful for the extra time they are spending, because if they flagged the property that you are working on, I can only imagine what they would do to a first-time homebuyer's file if the appraiser didn't put in the extra time! I hope all works out for you with this transaction, and thank you for the new appreciation for the pressures the appraisers must be under!
Jason, I believe it must be nationwide. Lenders can no longer chose their appraisers, they go down a list. I have been getting some appraisals come in low and having to be resubmitted. The appraisers are not from Ann Arbor ,they don't know one area of town from another. If you have a home near downtown, or the "arb" it will sell for 200.00 plus a square foot. They don't know or understand the nuances of a local town.
Thanks for yout tasking the time to provide us with this information in the Active Rain network. AR is the new "cyber backbone" of the industry, and with it's uplink to Localism.com it will transfrom the marketplace. Agents who don't see which way the cyberwind is blowing are going to find themselves at a considerable disadvantage inside of three to five years.
JASON - It's amazing that the banks are now headed in the other direction. There was a time when a pulse was enough to get financing, and now they want your first born. There has to be a happy medium, otherwise, how is anyone supposed to do any business?
We are hearing more of the appraisal issues coming up. It is getting even more of an problem as the bubble seems to have have every one on edge and protecting themselves against what was the shady deals of a few.
bonner
I had one where my buyers had to sell their home in CA and the second appraisal came in lower then the contract price. their buyer wanted to adjust the sales price of the home 40,000, I suggest they spend the 300 bucks and get a 3rd appraisal. (turns out the 1st one was bank (came in right at contract $$) , second one buyer's buddy (wonder why it was low?) and the 3rd one was independent but favored the seller- Deal finally went through but messed up our closings here for about 10 days. sorry to hear you had a problem. cw
We had this happen last month - but there was only a 5K discrepancy which was able to be worked out by re-negotiating - yours seems very far off -
In our state most of the time the assessed value is less than the appraised value!
Keep us posted to the outcome Jason -hopefully it will be a positive one and we can all benefit from your experience
Sincerely,
Grace
Unbelievable. How can there possibly be such a descrepancy between appraisal values? Current underwriting requirements could certainly be a topic all on its own. Good luck Jason!
Jason,
I am blown away by this. Please let us know how everything went down in a new blog. I wish you the best and hope it all works out okay. Good luck!
Jason, I lost a biggie just like this about three months ago. I spent the whole first quarter of the year working it hard.
and, BAM. Down the tubes.
I'm so sorry to hear about this. The bank turned us down flat and said...sorry, it doesn't comply with FHA guidelines....tough.
Made no difference the assets of the buyer or the true value of the property.
I hope this doesn't become a habit...
Again, I'm sorry this happened to you. I was the one over the toilet.
BTW, I'm so glad you are our Texas leader...I shall always be proud to follow!
Later in the rain~Deb
We are definitely in an environment where appraisal issues will be affecting our transactions. Actually, it this had happened several years ago, we might not be in the position we are now. There were m any honest appraisers who just couldn't get work because they wouldn't inflate the values.