A home-buyer's rant! (Ferndale, Lapeer: mortgage, credit, loan)

[jeanniepep]

Please pardon me while I vent a little here, I'm extremely frustrated and need an outlet!!

About a month ago, my husband and I decided to move from our current rural community in Lapeer County down to Ferndale (we're in our 30's, no kids, love to go out & have fun, are sick of driving 90 minutes to see our friends or do anything else). Long story short, we quickly found the perfect house: totally remodeled, the neighborhood we wanted, etc. They had received another offer a few days after we saw it, so we went in and offered list price but asked for 3% seller concessions toward closing costs (we have great credit but no savings). The seller's realtor responded angrily that it was a crappy offer and the house was worth way more than that, and the sellers were not going to bring one penny to the table. Maybe I'm naive but I thought the list price was a starting point for negotiation - not the absolute bottom line. Geez.

So, their counteroffer was to raise the home price by about $2500 and bring the corresponding cash to the closing table. Our realtor expressed concern that it might not appraise that high because the market has been so low, but he was adamant that he was selling the best house ever and it would appraise way higher than everyone's wildest expectations. We really wanted the house so we offered him the opportunity to hand-pick the appraiser. He declined, so we used our lender's usual appraisal company.

Couple of weeks later, the appraisal comes back and surprise: it's low. Way low. About $10K less than the purchase agreement and nearly $8K below the original list price. Because we're going FHA, we can't get a loan for more than the appraised price. However, since it appraised so much lower, we could potentially afford all the closing costs and not need any sellers concessions.

Meanwhile, the sellers realtor has gone off the deep end, sending nastygrams to the appraiser and our loan officer, going so far as to say that the first-time buyer tax credit means that we (the buyers) are "double-dipping the system without any adjustment to credit the seller" and that the sellers "want to sell but do not wish to be abused in the process." (Ironically, he hasn't said one word to our realtor yet, just the financial people which is not only inappropriate but sort of pointless).

First of all, the tax credit is between the buyer and the government and has nothing to do with the seller or the appraisal. For one thing, it's a CREDIT and not a pile of cash that we have access to before closing. Even if we did have access to the money, it doesn't seem right that we should be forced to use it to close the gap between the list price and the appraised price. Why should we start our mortgage off with negative equity on Day 1? And since when does selling a house at the appraised market value constitute ABUSE of a seller? It's a down market, has been for a while. They put it on the market, nobody's holding a gun to their head forcing them to sell it. The fact that the FHA won't loan us more than what the house is worth is not our fault!

I thought this was supposed to be a buyer's market - why does it have to be so flippin hard to buy this house?? We were supposed to be closing in a few weeks and moving in July, we were so looking forward to moving in! I know there are other fish in the sea, but at this point I'm wondering if we're going to have a big fight on our hands with ANY house in this market! They're ALL going to appraise low, the market sucks! Is every seller going to freak out and kill the deal right when we're about to move in?

AAAAAARRRRRRRRGGGGGHHHHHHHHH!!!!!!

[magellan]

I hear all this talk that "it's a buyer's market", but it's not at all. Not just in Michigan, but nationally, a huge percentage of homeowners are underwater on their mortgages, or they owe more than the house is worth. This doesn't make a good buyer's market or a good seller's market, because a reasonable price can not be settled on that doesn't cause one party to be under "duress."

But that realtor is wrong, the homebuyers' tax credit was not set up to inflate appraisals for sellers. The appraisal is based on comparable houses that have sold in the area (appraisers are even limiting it to going back only 3 months, when they used to go back 9 months or a year). IT IS THE MARKET VALUE. He or she is just frustrated and crossing the line of professionalism, IMO.

I'd get copies of the nastygrams and forward them to your Realtor and have him/her deal with it (that's what they get paid for, to negotiate on your behalf). I'm afraid you probably won't get this home.

[jeanniepep]

The market is definitely a no-win situation for sellers, I don't envy anybody on that front. These particular sellers are not underwater; they bought the house for less than the appraised price over a decade ago. They poured a lot of money into renovations though - they don't owe any money, but they won't be getting those renovation costs back. Honestly I feel bad for them, they did a great job on the house and it looks wonderful. I'd be really bummed about losing those renovation costs too.

I have been forwarding the nastygrams on to my realtor so she knows what she's up against (after he reacted so badly to our original offer, she already had an idea this was not going to be fun). This guy is definitely not behaving professionally! Sending nastygrams about us to our loan officer is not only inappropriate and ineffective, but it's downright stupid because our loan officer is my husband's father! So of course we get a copy of everything!

I seriously don't think the seller's realtor has even presented the appraisal number to his sellers yet, he's trying to figure out a way to get a higher number before he has to talk to them. Which is also unprofessional because they need to be the ones to decide how to react to the news (reduce the price, get a 2nd opinion, just stay in the house til the market improves, etc). It's their decision, not his.

I'm still holding a slight glimmer of hope for this beautiful little house because I know the sellers sincerely want to move as soon as possible - they were already all packed up into moving boxes in the appraisal photos, more than a month before closing. But, there will be other houses. I just didn't think this process would be so difficult. When we sold our house, it took 14 months to get an offer - we lost money too but we were just happy to not have to worry about it anymore (or pay two heating bills for another winter).

[michigangolfer]

Let me reply as a seller. We are selling our home and moving out of state and we had an appraisal come in 10,000 dollars less than the agreed purchase price. We had no other recourse than to agree to change the price and take the loss. The appraisers don't have to answer to any one which needs to be changed. So it doesn’t matter what the selling price is or what the purchase agreement is the only thing that matters is what the appraisal says.

[magellan]

Originally Posted by michigangolfer

Let me reply as a seller. We are selling our home and moving out of state and we had an appraisal come in 10,000 dollars less than the agreed purchase price. We had no other recourse than to agree to change the price and take the loss. The appraisers don't have to answer to any one which needs to be changed. So it doesn’t matter what the selling price is or what the purchase agreement is the only thing that matters is what the appraisal says.

Huh? Who do you think the appraiser should answer to?

[cobolt]

I personally don't think the house is worth this much stress and heartache. Can't you find something like it and deal with more pleasant people and circumstances?

[jeanniepep]

It has been really stressful - I've been clenching and grinding my teeth in my sleep so much that my jaw is killing me! Not to mention eating everything in sight....I don't deal well w/ stress!

We have been on the verge of walking away just because this realtor has been so hard to work with, but we can't forget how perfect the house is for our lifestyle. If the deal falls through, it falls through, but we'd still like to make it work if possible. We really love the place and had mentally/emotionally moved in already.

But, our 2nd and 3rd choices are still on the market, in the same neighborhood, almost as nice...we've told our realtor that if it's not resolved by Wednesday we'll be tearing up this purchase agreement and putting in an offer on #2 or #3. Now that we know how the appraisal will go, we will probably offer a bit less than we did on the first one. I hope that those sellers might be a little easier to work with!

[dagnabit9]

I ran into that kind of thinking when I purchased my current home in 1995. The appraisal came in way under the asking price and since I was doing a VA loan I was in about the same boat as you are. I got calls from the seller asking me to take out a loan for the difference, their realtor was calling making veiled threats, etc., etc. Long story short, stick to your guns! If they're looking to sell it'll happen; if not, you move on and they're still stuck with the house. It's not worth all the aggravation!

[dmarie123]

Originally Posted by michigangolfer

Let me reply as a seller. We are selling our home and moving out of state and we had an appraisal come in 10,000 dollars less than the agreed purchase price. We had no other recourse than to agree to change the price and take the loss. The appraisers don't have to answer to any one which needs to be changed. So it doesn’t matter what the selling price is or what the purchase agreement is the only thing that matters is what the appraisal says.

Are you serious? That's part of what got us in this mess of an economy in the first place. Appraisers were in bed with loan companies and appraising houses too high, causing them to be sold for more than they were worth...leading to the subsequent decline in artificially inflated house prices.

[GeminiGal]

Originally Posted by dmarie123

Are you serious? That's part of what got us in this mess of an economy in the first place. Appraisers were in bed with loan companies and appraising houses too high, causing them to be sold for more than they were worth...leading to the subsequent decline in artificially inflated house prices.

I think the argument now is that the appraisels are coming in too low because they are now scared. My neighbor who is a realtor says that she has been many of them lately that are just off the charts low. Absolutely no gray area. Ex: two houses - one really upgraded and basic - same sq footage - same appraisel price. So essentially the appraisers are again dictating the market. She (realtor) is dumbfounded on how to properly price/list/sell a home based on what she has seen.