Advice on Home Inspection findings (days on market, sale, apartment)

[PD517]

Originally Posted by latest obsession

Yea the bank is not going to give me a loan based on the asking price. I can either come up with the $50K (not gonna happen) and add to the 20% down payment i was going to make, renegotiate the price to reflect the appraisal, get another appraisal, or walk away from the deal.

Right now i'm waiting to hear from my lawyer to see what the next step is. I'm not sure the seller is going to lower their price that much so we'll see...

Anyone else go through the same thing? how did it turn out?

Choice #4. I've mentioned before in my previous posts this is happening more and more now and will continue to escalate in the future. Majority of appraisals are not hitting the mark (buyer and seller agreed price). Unless you are going in all cash deal, then you're at the mercy of the lender who is gonna dictate the terms. Forget about trying to get the bank to redo the appraisal, especially at a $50k difference, they won't even consider it. The appraiser probably wasn't even from the local market. The banks know RE is still way overpriced out here and still has a ways to go, deals are being killed left and right.

Where in NJ is this? Central and South NJ were getting hit pretty hard by this over the past year but I've been seeing North NJ getting it a lot more now. You said you can't come up with the extra $50k - good luck getting the sellers to come down - most are still in denial of the state of the housing market. You can try and start all over with a different lender and a new appraisal but you likely see the same result - they all running the same valuation models.

Plus you got a lot of items on the inspection list. Some of the stuff isn't a dealbreaker, but if you choose to continue I would def be concerned with the water issues and mold - can be VERY costly - use your own contractor to determine. Also make sure if they did any past renovations on the home that EVERYTHING WAS DONE PROPERLY WITH PERMITS - I cannot emphasize this enough - go down to city/town hall and pull all the records. You do not want to get added burden of the city finding out things were not done correctly and hitting YOU with the fines.

Oh and regarding the "other offer", if there even was a legitimate one, they will have the same problems unless it's an all cash deal and they can dictate the price to pay, not the bank.

[latest obsession]

Originally Posted by PD517

Choice #4. I've mentioned before in my previous posts this is happening more and more now and will continue to escalate in the future. Majority of appraisals are not hitting the mark (buyer and seller agreed price). Unless you are going in all cash deal, then you're at the mercy of the lender who is gonna dictate the terms. Forget about trying to get the bank to redo the appraisal, especially at a $50k difference, they won't even consider it. The appraiser probably wasn't even from the local market. The banks know RE is still way overpriced out here and still has a ways to go, deals are being killed left and right.

Where in NJ is this? Central and South NJ were getting hit pretty hard by this over the past year but I've been seeing North NJ getting it a lot more now. You said you can't come up with the extra $50k - good luck getting the sellers to come down - most are still in denial of the state of the housing market. You can try and start all over with a different lender and a new appraisal but you likely see the same result - they all running the same valuation models.

Plus you got a lot of items on the inspection list. Some of the stuff isn't a dealbreaker, but if you choose to continue I would def be concerned with the water issues and mold - can be VERY costly - use your own contractor to determine. Also make sure if they did any past renovations on the home that EVERYTHING WAS DONE PROPERLY WITH PERMITS - I cannot emphasize this enough - go down to city/town hall and pull all the records. You do not want to get added burden of the city finding out things were not done correctly and hitting YOU with the fines.

Oh and regarding the "other offer", if there even was a legitimate one, they will have the same problems unless it's an all cash deal and they can dictate the price to pay, not the bank.

The property is in Verona in North New Jersey. The appraiser was from North Arlington. Thanks for the advice - i'm definitely starting to think the mold may be a bigger issue than i had thought. And you are right, another appraisal is not going to bring it up 50K - the square footage of liveable space above the basement is only 1250sqft which i think is why it's appraising at so low. It is the smallest house i've seen - but the neighborhood is wonderful and it has a beautiful back yard. But i don't think those factor in as much when comparing to houses with more liveable space in the same area.

[nemmert]

Originally Posted by latest obsession

The property is in Verona in North New Jersey. The appraiser was from North Arlington. Thanks for the advice - i'm definitely starting to think the mold may be a bigger issue than i had thought. And you are right, another appraisal is not going to bring it up 50K - the square footage of liveable space above the basement is only 1250sqft which i think is why it's appraising at so low. It is the smallest house i've seen - but the neighborhood is wonderful and it has a beautiful back yard. But i don't think those factor in as much when comparing to houses with more liveable space in the same area.

The backyard will do next to nothing for an appraisal value, a finished basement is very much the same. It's all about the living space above ground and most of that is square footage. You may LOVE the color of the cabinets, and the granite choice the previous owners made... the bank doesn't really give a hoot.

I'm going under contract on a foreclosure... I'm actually hoping the appraisal comes back horrible to negotiate a lower price with the bank It's always nice to be willing to pay X but to only have to pay 90% of X because of a bad appraisal!

[icibiu]

I would keep looking, there are so many good deals to be had right now that paying for another appraisal would be silly since 50K is a big number the next appraisal is not likely to get you were you need to be. BUT since you
ve already paid for inspection AND appraisal why not just go ahead and ask if the seller will make your repairs AND lower the price 50K, probably not but since you've already spent about $1k on this house it's worth asking.

[elflord1973]

Originally Posted by latest obsession

i'm definitely starting to think the mold may be a bigger issue than i had thought.

Only way to tell would be to get a mold inspector in to take a look at it.

But I think you're probably going to have to walk away from it. The appraisal number is your starting point for negotiations, and it looks like they'd have to put up more cash for repairs.

Basically, one of three things happens:

(1) the seller wants to sell it, has the money to get out from under it, and is willing to spend that money => they make repairs and either sell it to you or relist it.

(2) the seller isn't all that motivated (or can't afford to get out from under it) and can afford the payments => they stay put

(3) the seller needs to sell and can't get out from under it => it goes into short sale or foreclosure.

[nemmert]

Originally Posted by icibiu

I would keep looking, there are so many good deals to be had right now that paying for another appraisal would be silly since 50K is a big number the next appraisal is not likely to get you were you need to be. BUT since you
ve already paid for inspection AND appraisal why not just go ahead and ask if the seller will make your repairs AND lower the price 50K, probably not but since you've already spent about $1k on this house it's worth asking.

Just to clear up this myth, there are not "a lot" of good deals to be had out there. I looked at probably 100 homes in my area of interest. Of the 100, three resonated well with me. One thing to remember about short sales and foreclosures... if they're having trouble making mortgage payments, you can only imagine how poorly they've neglected the maintenance of the home. You find a lot of "okay" homes but the "good" properties are hard to come by and move quickly. The home I'm going under contract on was listed on Thursday, I saw it Friday morning at 10am and had an offer in by 1pm only to find out another offer had already been made on the home. Nice homes priced well move, fast. My advice, if this is a home you love, tough it out and work with the seller. If it's just another okay home in a sea of okay homes, move on.

[elflord1973]

Originally Posted by nemmert

Nice homes priced well move, fast. .

I was looking at sold comps in the area where I bought my house, and not an insignificant number sold in less than 2 weeks. I would venture a guess that many other sold almost immediately after the final price reduction.

Short sales though will nearly always sit on the market for a while, because they don't come off the market the moment someone submits what will later be the winning bid.

[latest obsession]

Thanks for all the great advice everyone!

We've asked the seller if they will lower their price to the appraised value and take care of the mold. I think if they agree to this, i'd be the luckiest person because if they had marketed their home at this price, i wouldn't have even gotten a chance to see it. It would've been snatched up quick!

In the meantime, we're looking at more homes this weekend...i'll keep you all updated on how it turns out.

[latest obsession]

Originally Posted by nemmert

Just to clear up this myth, there are not "a lot" of good deals to be had out there. I looked at probably 100 homes in my area of interest. Of the 100, three resonated well with me. One thing to remember about short sales and foreclosures... if they're having trouble making mortgage payments, you can only imagine how poorly they've neglected the maintenance of the home. You find a lot of "okay" homes but the "good" properties are hard to come by and move quickly. The home I'm going under contract on was listed on Thursday, I saw it Friday morning at 10am and had an offer in by 1pm only to find out another offer had already been made on the home. Nice homes priced well move, fast. My advice, if this is a home you love, tough it out and work with the seller. If it's just another okay home in a sea of okay homes, move on.

I completely agree with you - there aren't that many great properties and the ones that are priced well usually have multiple offers on them.

The one caveat is that if you are into doing home renovations then there are definitely deals to be had. I'm not a handy person and any renovations i make would stop at painting and replacing fixtures. And i know there are a lot of buyers like me who balk at outdated kitchens and baths. But if someone could do the renovations, you could get a pretty sweet deal.

[PD517]

Originally Posted by latest obsession

I completely agree with you - there aren't that many great properties and the ones that are priced well usually have multiple offers on them.

The one caveat is that if you are into doing home renovations then there are definitely deals to be had. I'm not a handy person and any renovations i make would stop at painting and replacing fixtures. And i know there are a lot of buyers like me who balk at outdated kitchens and baths. But if someone could do the renovations, you could get a pretty sweet deal.

I wish you the best of luck with your potential purchase, I hope your seller comes to their senses and agrees to reduce the price (based on the appraisal which will not be changing for the better even under a different lender) AND perform the NECESSARY repairs (proper permits of course), because in the end they will be the ones who lose out. They can play the game for a while, but after a few potential buyers turning into killed deals, they all wake up in the end.

You are 100% correct in saying properties priced well will get multiple offers and eventually move quick.

Lots of sellers fail to realize that normal buyers today, both young and old, want MOVE IN condition homes. With the way of the world today, many do not have the time nor resources to buy a place needing X amount of repairs and renovations. When I say resources, I mean connections with various types of contractors who they trust to do the work and for the right price.

Of course there are those who do have those connections but they are far and few between. Usually reserved for investors, investment clubs and even the contractor themselves. These people are not your normal "buyer" - they have access to homes for sale (usually through direct seller deals, leads from real estate agents, etc..) before it even gets a chance to hit the MLS and general marketplace. Like I've said before, if it's a good deal its already been snatched up long before it even hits the general public. If you see a home sitting on the MLS for more then a week, IT IS NOT A GOOD DEAL.

For the normal buyer, I see all the time in the NY/NJ market, if something is in pretty good shape and priced correctly, even at a slight premium, it's gonna sell within the first week. Seriously, unpack and move in, enjoy your new home. Not having to spend another $50k-$100k fixing water and structural problems, redoing an outdated kitchen, redoing the bathrooms, roof work, mechanicals, etc, etc..

The things that are sitting and sitting, waiting for their agent to "suggest" a meaningless price drop, will continue to not sell. Pricing a home at a premium while it needs a ton of work is not a smart business model.

Where's all the outside the box thinking, BLUNT agents who give it to you straight with a great presentation based on facts and get your home sold and earn their commissions. Sitting there with the rest of the 90% who are making scraps. I know a few good ones in that top 10% who have been absolutely killing it, currently and in the past 2 years, who are up front with their clients and give it to them as it is (we're talking BOOK like presentations on what's really going on in this economy and local markets). These real estate agents and brokers will goes as far as to "fire" a seller who really does not want to comprehend and accept the reality of what is going on right now.

Conclusion: Don't feel too bad if this deal falls through. As time goes on, you will be seeing more and more properties that are getting down to normal (historical for NJ and your local market) pricing levels based on its condition. Great move in condition, good area, good pricing will sell. All the others: they can watch as the comps from earlier smart sellers continue to bring down their value. And with the MASSIVE wave of properties in NJ that are already in pre-foreclosure or already in foreclosure, no job creation and higher salaries in sight, STRICT mortgage lending standards, no more buying everything on and maxing out the credit cards, I'm sure that we'll back to 2005-2007 levels - in 20+ years....