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Old 09-25-2013, 09:29 AM
 
4 posts, read 4,802 times
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Hi,

We are trying to buy our first home (1970's ranch 3Bed, 2 Ba 1700sq ft beautiful house)... we negotiated $285k for the property. We have been looking in the area for a while and to us this was a fair price. Our credit is perfect and we are making a 20% down payment.

Now the appraiser comes in (from other part of the state!!) and does the appraisal without the listing agent or seller being on the property.

The appraisal came in @ 255k!!! a audit was requested by our agents... what happens if the audit does not come high enough?

What are our options??
The seller wont budge ... he says he has other offers pending if ours falls through. I agree this is not a $255k house.. that is unrealistic.
We do not have the money to bridge the gap.

Could a second appraisal or going to another bank (restarting the process) make a difference?

Thanks,
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Old 09-25-2013, 10:10 AM
 
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A second appraisal through another bank MIGHT help. But instead of assuming that the appraisal is too low, maybe you should consider that you apparently are paying over market value for this house.
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Old 09-25-2013, 12:38 PM
 
Location: Austin
7,083 posts, read 16,919,944 times
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If the appraiser is from another part of the state and is not from your area, you can definitely request a new appraisal be done by a local appraiser. You might have to pay for the second appraisal, but $400 is better than $30k cash to make up the difference.
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Old 09-25-2013, 06:56 PM
 
Location: OK
2,717 posts, read 6,297,109 times
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A local appraiser does not automatically mean that they are more geographically competent than one from away.

Ask your realtor to ask the appraiser -through the lender- to look at other sales that the realtor can send the appraiser.
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Old 09-25-2013, 07:32 PM
 
Location: Southern California
4,350 posts, read 4,944,071 times
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Default How much more are you willing to pay?

Quote:
Originally Posted by Annemieke Roell View Post
A local appraiser does not automatically mean that they are more geographically competent than one from away.

Ask your realtor to ask the appraiser -through the lender- to look at other sales that the realtor can send the appraiser.
For an appraiser to change their numbers is like admitting they were wrong and did a poor job. Although you felt it was a fair price, were there homes that sold near 285K in similar condition. The report has breakdown of the adjustments form the other sales, its there anything that stands out as "Wrong", incorrect number of bedrooms. A comps square footage doesn't match public records, meaning unpermited addition. A new appraisal can actually hurt you if sales are coming down. Even if there was a comp that helped but there are 3 more that hurt your case, how can the appraiser ignore those facts. Try to be factual and state way one would need to be omitted.

I don't know how much you want this house, but you might be able to ask your lender to see if they can do 10% down with PMI and you acknowledge that you are paying over the appraiser value of the house, the other 10% would still go to the seller but it won't be consider in the Loan to Value ration. It will cost you more short term, but if it is truly 285k, after 2 years you can ATTEMPT to get it removed if values stays the same. You'll need to talk to the PMI company, of if rates go down after 12 months and values go up refinance it. I think Lender Paid PMI is a gamble if you want to keep the property long term

Last edited by thelopez2; 09-25-2013 at 08:59 PM.. Reason: corrected details
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Old 09-26-2013, 01:22 PM
 
4 posts, read 4,802 times
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Quote:
Originally Posted by thelopez2 View Post
For an appraiser to change their numbers is like admitting they were wrong and did a poor job. Although you felt it was a fair price, were there homes that sold near 285K in similar condition. The report has breakdown of the adjustments form the other sales, its there anything that stands out as "Wrong", incorrect number of bedrooms. A comps square footage doesn't match public records, meaning unpermited addition. A new appraisal can actually hurt you if sales are coming down. Even if there was a comp that helped but there are 3 more that hurt your case, how can the appraiser ignore those facts. Try to be factual and state way one would need to be omitted.

I don't know how much you want this house, but you might be able to ask your lender to see if they can do 10% down with PMI and you acknowledge that you are paying over the appraiser value of the house, the other 10% would still go to the seller but it won't be consider in the Loan to Value ration. It will cost you more short term, but if it is truly 285k, after 2 years you can ATTEMPT to get it removed if values stays the same. You'll need to talk to the PMI company, of if rates go down after 12 months and values go up refinance it. I think Lender Paid PMI is a gamble if you want to keep the property long term
update... The appraisal review came in at $265,000 which is about 10k higher than their original number. We are confident of the selling price and will go for a second appraisal (fingers crossed)

The way we are going to do it (if needed) is ... instead of paying the $20,000 deficit, make extra payments on a 30 year loan over 2 years or go into a 15 yr loan (which was my favorite option anyways)

We end up paying $20k in 2 years either ways... cost to us by PMI = $3000 ish
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Old 09-26-2013, 07:54 PM
 
Location: OK
2,717 posts, read 6,297,109 times
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Quote:
Originally Posted by thelopez2 View Post
For an appraiser to change their numbers is like admitting they were wrong and did a poor job. Although you felt it was a fair price, were there homes that sold near 285K in similar condition. The report has breakdown of the adjustments form the other sales, its there anything that stands out as "Wrong", incorrect number of bedrooms. A comps square footage doesn't match public records, meaning unpermited addition. A new appraisal can actually hurt you if sales are coming down. Even if there was a comp that helped but there are 3 more that hurt your case, how can the appraiser ignore those facts. Try to be factual and state way one would need to be omitted.
I disagree. Appraisers are human and can make mistakes. I have received sales after the fact which I either missed or had not been updated in MLS/Tax Records at the Effective Date of the appraisal. I had no problems changing my Opinion of Value on the rare occasion when it was warranted.
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Old 10-16-2013, 11:38 AM
 
Location: Southern California
4,350 posts, read 4,944,071 times
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Quote:
Originally Posted by Annemieke Roell View Post
I disagree. Appraisers are human and can make mistakes. I have received sales after the fact which I either missed or had not been updated in MLS/Tax Records at the Effective Date of the appraisal. I had no problems changing my Opinion of Value on the rare occasion when it was warranted.
My point was sometimes appraiser due make mistakes, but bring factual concrete information when appealing the case to increase value, rather than emotions.
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