U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 05-13-2015, 03:18 PM
 
176 posts, read 132,896 times
Reputation: 26

Advertisements

My appraisal contingency is like 6 days from now and my bank has not even started the appraisal process - any suggestions on what I can do to fix this situation?

What are the risks of letting the appraisal contingency lapse - At this point I have an appraisal from another lender that stated market value (By cost approach) to be more by few thousands than my offer price - can I take comfort in this fact?

Please advise,
Thanks
YJ
Reply With Quote Quick reply to this message

 
Old 05-13-2015, 05:00 PM
 
Location: Bloomington IN
5,865 posts, read 7,085,877 times
Reputation: 14083
1. Get on the phone with your lender immediately and find out when the appraisal will be done and why it's been delayed. 2. Request that your agent write up an addendum to the contract extending the time for the appraisal. Have the agent fully explain the delay to the sellers.

Appraisals are funny things. What if the next one comes in a few thousand under the selling price? I wouldn't let it lapse, but I'm also very conservative about these things. Each person has a different tolerance for risk. Only you can decide yours.

With that said, if the house doesn't appraise will you get the loan? Do you a loan contingency?
Reply With Quote Quick reply to this message
 
Old 05-14-2015, 11:36 AM
 
3,317 posts, read 7,253,255 times
Reputation: 4095
Also, you want to use the Sales Comparison Approach, as that's what Lenders use.
Reply With Quote Quick reply to this message
 
Old 05-14-2015, 02:18 PM
 
176 posts, read 132,896 times
Reputation: 26
Quote:
Originally Posted by Pfhtex View Post
Also, you want to use the Sales Comparison Approach, as that's what Lenders use.
The sales comp price matches my offer price.

What does it mean? Does it mean that -

1. I have entered into average deal as I am paying the appraised value?

2. I have entered into good deal as appraised value is normally conservative?

OR

3. I have entered into bad deal as lenders have interest in closing loan even if it means they have to
crank up the appraised value to offer price? (Remember I am creditworthy, so that insures their interest income)


Thanks
--YJ

Last edited by YelloJacket; 05-14-2015 at 02:50 PM..
Reply With Quote Quick reply to this message
 
Old 05-14-2015, 06:03 PM
 
3,317 posts, read 7,253,255 times
Reputation: 4095
99%+ of the time, appraisers "stop" when they can support the price. Sometimes, it's nice to see an appraisal over the amount - - ok, that's always nice. But appraisers have the contract, and therefore a target to hit that will facilitate the deal.

That is NOT to say that they over-reach if the home is under value - at least not since, oh, 2008-ish. But the loan is based on the lower of the price vs. Sales comp appraised value.

I sometimes think that bubbles might be prevented if appraisers were not furnished with contract prices - because so many times, prices are not "realistic," but become real, when supported by an appraisal that has data built around that price.

So - it's very tough to say if it's a good deal or average. ALL of your points could be correct, and it's not my place to levy judgment. Just know that the vast, vast majority of purchase transactions are closed with an appraised value that matches the price, down to the dollar.
Reply With Quote Quick reply to this message
 
Old 05-14-2015, 06:52 PM
 
Location: Port Charlotte
3,926 posts, read 4,394,513 times
Reputation: 3395
Thing about appraisals. The vast majority are now ordered through Appraisal Management Companies, many of which are owned by the major lenders themselves. You may get a good appraiser who knows the market or get one that is willing to travel a hundred miles and doesn't have MLS in the area. Yes, it happens.

The reason for the appraisal delay may be several issues. The lender has delayed ordering the appraisal. The appraiser is backed up, hasn't gotten to it. The appraiser has done the appraisal but it is hung up in either the AMCs review process or in the banks review process. Or the appraiser has not been able to get access to the property.

Call the LO and ask where it stands.
Reply With Quote Quick reply to this message
 
Old 05-14-2015, 08:18 PM
 
Location: South Texas
478 posts, read 827,508 times
Reputation: 593
Quote:
Originally Posted by Pfhtex View Post
99%+ of the time, appraisers "stop" when they can support the price. Sometimes, it's nice to see an appraisal over the amount - - ok, that's always nice. But appraisers have the contract, and therefore a target to hit that will facilitate the deal.
Pfhtex, I've agreed with many things you've said but this comment is totally incorrect.

Appraisers do NOT have a sales price "bulls eye". Ever. To do so is potentially misleading or, at worst, committing fraud.

The market data is what the market data is. The research drives the analysis which then drives adjustments used in the Sale Comparison Approach.

The sales contract for the subject property is analyzed for the contracted sales price, concessions, and other content but is talked about in the Contracts section of the appraisal report and is NOT part of the Sales Comparison or Cost Approach of the appraisal. This sale of the subject property is NOT a closed sale...yet.

Any appraiser who is reaching to try and meet a sales price that exceeds the market value of the property "just to facilitate a deal" is looking for big trouble. The appraisal is likely NOT going to pass a Desk or Field Review and may face state board action which could result in fines and lose of their license. No appraiser that I know would ever stretch a market value just to make a deal work. The risks are just too high.
Reply With Quote Quick reply to this message
 
Old 05-14-2015, 09:03 PM
 
176 posts, read 132,896 times
Reputation: 26
Quote:
Originally Posted by TexasDillo View Post
Pfhtex, I've agreed with many things you've said but this comment is totally incorrect.

Appraisers do NOT have a sales price "bulls eye". Ever. To do so is potentially misleading or, at worst, committing fraud.

The market data is what the market data is. The research drives the analysis which then drives adjustments used in the Sale Comparison Approach.

The sales contract for the subject property is analyzed for the contracted sales price, concessions, and other content but is talked about in the Contracts section of the appraisal report and is NOT part of the Sales Comparison or Cost Approach of the appraisal. This sale of the subject property is NOT a closed sale...yet.

Any appraiser who is reaching to try and meet a sales price that exceeds the market value of the property "just to facilitate a deal" is looking for big trouble. The appraisal is likely NOT going to pass a Desk or Field Review and may face state board action which could result in fines and lose of their license. No appraiser that I know would ever stretch a market value just to make a deal work. The risks are just too high.
What if the buyer has a solid track record of loan repayment? Everyone likes to make money, even the lenders! don't they? - Especially if the loan is insured with PMI, then there is no sweating over the safety of the principle.

If the appraiser lowballs everytime in the appraisal the banks may stop working with them - this might have a trendsetting effect, match up the offer price and make things work or lose out! Which appraiser want to estimate low?

The important point is I do not see a financial disincentive in the process for lenders or appraisers to stay way from inflating the estimates.
Reply With Quote Quick reply to this message
 
Old 05-15-2015, 05:45 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,618,792 times
Reputation: 8078
Quote:
Originally Posted by YelloJacket View Post

The important point is I do not see a financial disincentive in the process for lenders or appraisers to stay way from inflating the estimates.
The lender has zero interest if the appraisal is high or low. The only concern is if it supports the value for the collateral. I also agree that appraisers don't stop at a target sales price. As a credit union, we don't have a seasoning requirement (required minimum length of time of ownership) to refinance, nor do we disqualify homes that have recently been listed for sale. Both variances can lead to some very interesting valuation challenges for appraisers.

All we care about is the appraiser supports his or her valuation with facts and explains their reasoning. Period. If the work is sloppy, the value typically will not be supported or grossly under-valued. Rarely does the sloppy appraiser hit the correct value range. And let's face it, agents write offers every day for values they never believe will be accepted or appraise - it's part of the job, writing what their client requests.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top