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Old 06-16-2010, 11:53 PM
 
Location: GA
34 posts, read 162,653 times
Reputation: 27

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Hey all - I'm curious if we were:

1. hoodwinked
2. we ourselves didn't pay close enough attention
3. or if we have no problem at all

Here's the scenario:

We found a home we liked. During our own investigation of what we should offer (OLP was $328K) - we found no comps in the neighborhood itself as nothing had sold in our 80-house subdivision in a few years. There were one or two odd foreclosure scenarios, but they had dropped off the radar as if they got out of foreclosure. We'd become pretty experienced with the whole comp deal as we had just sold our home so felt comfortable with how it all worked. So we (and our realtor) did as much digging as possible. We ended up agreeing with the seller on a price of $317 with $5,000 in closing costs paid by the seller to us. I guess you could say we paid $312.

Everything moved along smoothly. Inspection went great. We were sweating the apprasial. It came back at $328K. WHEW. Sort of like walking into equity, right? I thought it would come back low. But our realtor mentioned that when an apprasial is stamped at the OLP when the deal price was actually lower, it might actually have been even a little higher.

We bought the home 2 months ago and are living in it now. Everything is great.

But after meeting our neighbors, we're hearing grumblings about property values. Turns out another new friend around the corner bought their house for $235K straight up just 6 months ago. It is comparable to ours and just as nice. It didn't show up on any of our searches when we were researching the neighborhood. Turns out a flipper bought that home as a foreclosure for an ungodly low $125, flipped it and sold it to them. Yet I didn't find it. My realtor didn't find it either.

After we bought our house (so within the last 2 months), a comparable home went on the market and sold as a foreclosure at $235K.

There are now 2 other homes on the market here. In the $250-$277 range. They are not as nice as ours. But from an appraisal standpoint, they have the comparable size yard, home, etc.

I know that a "mint condition home" with all the upgrades when compared to the identical house next door that's in older condition without upgrades won't appraise that differently. I know there are some generalizations appraisers make - perhaps tack on $7K for granite counters, etc.

But now my wife is in tears thinking we overpaid. I say if we bought one of the other homes now on the market here for $265 - it would take at least $50K+ to bring it up to the quality of our home. That would be similar to paying $315 - right around what we did pay.

She counters that she's not worried about that. She thinks if we put our house on the market, or even had it appraised today, it would appraise for perhaps $265ish. She's upset that we're way upside down and only 2 months in. She has a point.

I looked back at our appraisal. In it, the appraiser went outside our subdivision to find comps. There was all the standard mumbo-jumbo about how he came to his conclusions. He did not find or note our friend's house that sold for $235 6 months ago - nor the foreclosure that led to it just 4 months before. We heard appraisers were now forced to consider them (unlike the old days).

I know we cannot control what, today, anyone puts their house on the market for. I know that 10 of my neighbors could want a quick-sale and go on the market $255. If they sold - my property value would drop. That's the deal, I get it. Happens everywhere, and out of my control.

But my wife feels that based on everything we're seeing in terms of newly discovered past sales, and the prices people are putting their homes on the market here suddenly - that our apprasial shouldn't have come in as high as it did.

She wants to contact our <very conservative> bank and call foul. She wants to say we never would have bought the house if the appraisal came back at perhaps $280 ($40K+ below the asking price). She wants to get another appraisal today, just to see.

So I guess my question is are we worried about nothing? Perhaps the second the keys change hands - all bets are off - and anything could happen. Maybe our appraisal was spot on (on the day it was done 2 months ago, that is).

But she's thinking we lost $50K+ in equity in 2 months. Yeah, we're not selling tomorrow, we just moved in.

She's talking about government programs and whistleblower stuff. Hmmm.

So assuming she's right - we get an independant apprasial tomorrow (2 month's after the bank's appraisal) and it comes back $50K light - do we have any recourse? Could we claim fraud against the appraiser and bring it to our bank's attention, particularly since he apparently didn't not one (or more) foreclosure scenarios as comps?

Looking forward to the responses from this one...
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Old 06-17-2010, 12:46 AM
 
10,783 posts, read 11,849,014 times
Reputation: 4795
I think you guys just were at the wrong place at the wrong time. With no actual comps to compare to, it's very difficult to get a true value. The listing seller was likely in the same situation, got an appraisal and listed at the price that you got back as well. Foreclosures do not count as neighborhood values only actual "clean" sales. If there are actual, none foreclosure sales in the 250-277 range, then that will give you the true value of the homes currently in that area.
It sounds like you guys did what was right at the time, but unfortunately later found out you really over paid.
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Old 06-17-2010, 04:59 AM
 
Location: NJ
17,579 posts, read 39,770,900 times
Reputation: 16146
Just go on with your life. You paid an amount you agreed was a good value at the time. Your monthly payment hasn't changed. Enjoy your house.
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Old 06-17-2010, 05:06 AM
 
Location: OK
2,747 posts, read 6,487,868 times
Reputation: 1894
Quote:
Originally Posted by denemante View Post
Hey all - I'm curious if we were:

1. hoodwinked
2. we ourselves didn't pay close enough attention
3. or if we have no problem at all

Here's the scenario:

We found a home we liked. During our own investigation of what we should offer (OLP was $328K) - we found no comps in the neighborhood itself as nothing had sold in our 80-house subdivision in a few years. There were one or two odd foreclosure scenarios, but they had dropped off the radar as if they got out of foreclosure. We'd become pretty experienced with the whole comp deal as we had just sold our home so felt comfortable with how it all worked. So we (and our realtor) did as much digging as possible. We ended up agreeing with the seller on a price of $317 with $5,000 in closing costs paid by the seller to us. I guess you could say we paid $312.

Everything moved along smoothly. Inspection went great. We were sweating the apprasial. It came back at $328K. WHEW. Sort of like walking into equity, right? I thought it would come back low. But our realtor mentioned that when an apprasial is stamped at the OLP when the deal price was actually lower, it might actually have been even a little higher.

We bought the home 2 months ago and are living in it now. Everything is great.

But after meeting our neighbors, we're hearing grumblings about property values. Turns out another new friend around the corner bought their house for $235K straight up just 6 months ago. It is comparable to ours and just as nice. It didn't show up on any of our searches when we were researching the neighborhood. Turns out a flipper bought that home as a foreclosure for an ungodly low $125, flipped it and sold it to them. Yet I didn't find it. My realtor didn't find it either.

After we bought our house (so within the last 2 months), a comparable home went on the market and sold as a foreclosure at $235K.

There are now 2 other homes on the market here. In the $250-$277 range. They are not as nice as ours. But from an appraisal standpoint, they have the comparable size yard, home, etc.

I know that a "mint condition home" with all the upgrades when compared to the identical house next door that's in older condition without upgrades won't appraise that differently. I know there are some generalizations appraisers make - perhaps tack on $7K for granite counters, etc.

But now my wife is in tears thinking we overpaid. I say if we bought one of the other homes now on the market here for $265 - it would take at least $50K+ to bring it up to the quality of our home. That would be similar to paying $315 - right around what we did pay.

She counters that she's not worried about that. She thinks if we put our house on the market, or even had it appraised today, it would appraise for perhaps $265ish. She's upset that we're way upside down and only 2 months in. She has a point.

I looked back at our appraisal. In it, the appraiser went outside our subdivision to find comps. There was all the standard mumbo-jumbo about how he came to his conclusions. He did not find or note our friend's house that sold for $235 6 months ago - nor the foreclosure that led to it just 4 months before. We heard appraisers were now forced to consider them (unlike the old days).

I know we cannot control what, today, anyone puts their house on the market for. I know that 10 of my neighbors could want a quick-sale and go on the market $255. If they sold - my property value would drop. That's the deal, I get it. Happens everywhere, and out of my control.

But my wife feels that based on everything we're seeing in terms of newly discovered past sales, and the prices people are putting their homes on the market here suddenly - that our apprasial shouldn't have come in as high as it did.

She wants to contact our <very conservative> bank and call foul. She wants to say we never would have bought the house if the appraisal came back at perhaps $280 ($40K+ below the asking price). She wants to get another appraisal today, just to see.

So I guess my question is are we worried about nothing? Perhaps the second the keys change hands - all bets are off - and anything could happen. Maybe our appraisal was spot on (on the day it was done 2 months ago, that is).

But she's thinking we lost $50K+ in equity in 2 months. Yeah, we're not selling tomorrow, we just moved in.

She's talking about government programs and whistleblower stuff. Hmmm.

So assuming she's right - we get an independant apprasial tomorrow (2 month's after the bank's appraisal) and it comes back $50K light - do we have any recourse? Could we claim fraud against the appraiser and bring it to our bank's attention, particularly since he apparently didn't not one (or more) foreclosure scenarios as comps?

Looking forward to the responses from this one...
There are several (erroneous) generalizations in this post pertaining to appraisals, but I will limit myself to this: hire your own appraiser and ask him/her to do an appraisal with the same effective date as the one the bank used.
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Old 06-17-2010, 05:58 AM
 
Location: Union County
5,787 posts, read 8,433,431 times
Reputation: 4818
Quote:
Originally Posted by Annemieke Roell View Post
There are several (erroneous) generalizations in this post pertaining to appraisals, but I will limit myself to this: hire your own appraiser and ask him/her to do an appraisal with the same effective date as the one the bank used.
Why?! It's not a shirt he can return to Marshall's.

At this point it is what it is...
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Old 06-17-2010, 06:18 AM
 
Location: Marion, IN
8,191 posts, read 28,115,521 times
Reputation: 7114
Quote:
Originally Posted by manderly6 View Post
Just go on with your life. You paid an amount you agreed was a good value at the time. Your monthly payment hasn't changed. Enjoy your house.
Couldn't have said it any better.

You and your agent could not find the flip house, but you feel the appraiser should have? That's not very fair. Remember, an appraisal is someone's opinion. You could hire 3 appraisers on the same day and get 3 very different results.
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Old 06-17-2010, 06:20 AM
 
11,636 posts, read 20,442,803 times
Reputation: 12165
This is a good example of why you have to look beyond MLS for comps. Some areas do not make property sales public. In my county the property appraiser has a great website that tells you a lot of information about a property, including:

1. Size of home
2. Size of lot
3. Complete sales history (with the ability to see documents).
4. All changes in title
5. What kind of change in title.
6. Parties to all title changes.
7. Whether the sale was Qualified or Disqualified for valuation purposes-This is an important indicator because it tells you whether there was some reason that the value of the home is (Q) or is not (D) comparable to other similar homes. Merely being a foreclosure does not disqualify a property however many foreclosures are disqualified.

The tax records show you ALL sales whether they go through MLS or not.

I do not think your wife is automatically right though. In my area the appraiser does adjust for things like condition and upgrades.
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Old 06-17-2010, 06:33 AM
Itz
 
714 posts, read 1,925,486 times
Reputation: 885
It is what it is.. you and your wife agreed to the price you bought it at.. to YOU the house was worth x dollars.

appraisers are human and take many factors into account... the only "base" they had to go (from what I understand in your post) is 0 recent sales (although you can go to the county and look it up online - but its not a "broad" search that way).. So with a minimal base and probably data that was outdated x amount of years, they appraised the property based on that data...

Will finding out you paid 50k or so MORE then x person down the street really make a difference. Homes are not like going to the store and paying the same amount for a shirt as every john/jane doe does.
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Old 06-17-2010, 06:39 AM
 
Location: MID ATLANTIC
7,731 posts, read 18,615,543 times
Reputation: 8394
I don't know enough about what hoops appraisers are suppose to go through with available data, what rocks they must turn over......but it does sound like there was data there, just not the typical source, the MLS.

Your journey you are contemplating involves many hoops, and still may yield no results. As recommended above you need an appraisal dated back to the time the other appraisal was dated. Not two months after, actually, not even 2 days after. Appraisals are constant moving targets. Appraisals typically only consider closed sales. Whatever happens after the date of the appraisal is not material to the claim of a bad appraisal. Exception: pending contracts can support an appraiser's final number to demonstrate a trend. But if you are aware of the fall-out lately, under contract doesn't mean squat.

If you have a copy of the original appraisal, you should also have the appraiser review the appraisal used in your purchase for possible fraud. If you don't have a copy, the lender is not obligated to provide you with a copy now. (You signed a disclosure acknowleging you had the right to a copy of the within 30 days of closing upon request - assuming this was a conventional or FHA loan). The appraisal belongs to the lender/investor and they are not required to provide you a copy now. That doesn't mean they won't send you a copy if you ask nicely. (Hint: tell them it's needed for insurance purposes, you're reviewing coverage).

And finally, who was your lender that originated the loan and who has your loan now? If it's a big box bank, chances are they used an in-house appraiser and the appraisal wasn't subject to a great deal of scrutiny. If that is the case for you, do not expect a whole lot of cooperation from the lender. After all, the appraisal and the bank are the same company. If the appraisal was done for someone that delivers the loan into the secondary market or a specific investor, chances are the appraisal received a fair amount of scrutiny. This is true of most appraisals done in the past 3 or 4 years. An appraisal is an opinion of value. As long as an appraiser supports his work with facts and data, it's hard to argue with opinion. (It's the question of obligation to turn up information that is not readily available or known to the public, at the time the appraisal was signed and dated).

Falling values have been the instrumental in our constantly changing underwriting guidelines. The fact the value fell after closing doesn't come into play at all. In my opinion, you need to prove the prior appraisal was fraudulent. In today's environment of CYA, that's incredibly hard to do (get by the underwriters)........but times are also desparate and who knows what someone will do to please a client to keep the business flowing. So, while I won't say it's impossible, I will say it's not likely.
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Old 06-17-2010, 06:59 AM
 
17,787 posts, read 19,805,586 times
Reputation: 7442
I think your wife is going through buyer's remorse... I bought into a neighborhood where homes are selling for $350k and all the homes are pretty much alike... I bought it for $285k... did I get a great deal? Yes... is everyone suppose to get a great deal? No... Its all about timing.. you bought your home when it was worth so and so... you assume INCORRECTLY that house prices will go up... it seems like it is going down... what a home is worth and what it actually sells for are different issues... if the previous homeowners sells to someone less than what you paid for, they have that right... the ONLY thing you should of offered is a price you can live with regardless if it is too high or too low... personally, with the way the market is, I would of offered much lower... but hey live and learn... your wife has no recourse in the matter... she could of brought it up that she didn't like the price at closing but she didn't so she was happy with that price de facto... I don't complain when one grocery store charges less for an item than another grocery store... it was my choice to buy it at that price...
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