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Well, it looks like the housing market in NOVA has recovered. We finally go the house all cleaned up and the wife painted just about anything that didn't move. It was listed Sat. morning and we just had a bid presented by our realtor this afternoon. Sold at full asking price with no closing cost kickins. Now all we need is for the appraisal to meet the asking price--closing is October 9 and we have to be out by Dec. 1. Guess that means we'll be in Asheville for Christmas!
Well, it looks like the housing market in NOVA has recovered. We finally go the house all cleaned up and the wife painted just about anything that didn't move. It was listed Sat. morning and we just had a bid presented by our realtor this afternoon. Sold at full asking price with no closing cost kickins. Now all we need is for the appraisal to meet the asking price--closing is October 9 and we have to be out by Dec. 1. Guess that means we'll be in Asheville for Christmas!
This just keeps getting better--we've got a backup offer being presented tomorrow and this one has enough cash for a 20% deposit. That means that the appraisal won't be a factor in the deal! Maybe we'll get a bidding war going here and sell for over the asking price.
Mule--thanks for the offer and I'll be in touch--maybe we can get together for drinks or dinner when we come down for the house hunting trip next month. Right now we have about 30 listings saved on the BH website. The one my wife has her heart set on is in the Arden area in the development I mentioned in our previous email. Since we have this tomb paid off we'll be able to make a cash offer down there and as our agent BH agent says "cash is king". So I don't think we'll have any problems closing in under a month down there. Right now I'm trying to talk the boss into letting me continue working down there for a few months into next year so I can transition slowly--retiring too fast might be deadly--but what a way to go!
This just keeps getting better--we've got a backup offer being presented tomorrow and this one has enough cash for a 20% deposit. That means that the appraisal won't be a factor in the deal!
Regardless of how much the buyer is putting down, if the buyer is obtaining a loan for the remaining amount, the property must still appraise for the full selling price. That helps protects the lender in case the value depreciates. You know what has happened to so many lenders who loaned 90%, 95% or even 100+% and now the house is now worth less than is owed...
Regardless of how much the buyer is putting down, if the buyer is obtaining a loan for the remaining amount, the property must still appraise for the full selling price. That helps protects the lender in case the value depreciates. You know what has happened to so many lenders who loaned 90%, 95% or even 100+% and now the house is now worth less than is owed...
Kootr--the following is what I have found on several sites with respect to low appraisals. I will of course get the final answer from our agent when the contract is presented. The primary contract is an FHA loan whereas the backup will be conventional.
* Buyer can make up the difference in cash.
The lender cares about the appraisal only to the extent it affects the loan-to-value ratio. A low appraisal does not mean the lender won't lend. It means the lender will make a loan based on the ratio agreed to in the contract at the appraised value.
* The seller can lower the price.
If the home was overpriced or the value was inflated, often this is the best solution. It makes the buyer happy and the lender is satisfied. There is no guarantee that if the buyer walks away, the seller won't receive a low appraisal from the second buyer's lender, not to mention the time and trouble it takes to sell the property again. Sometimes a bird in the hand is best.
* The seller can offer to carry a second mortgage for the difference.
If the buyer really wants the home but cannot come up with the difference in cash, making payments or a lump sum payment at a later date to the seller is an option. After the escrow closes, sellers often retain the right to discount the second mortgage, sell it for less than face value to an investor.
* Order a second appraisal.
First, if your loan is an FHA loan, ask the lender for a list of approved appraisers. Either the seller or the buyer can pay for the second appraisal. Sometimes the second appraisal will come in higher than the first, especially if the first appraiser was inexperienced or made mistakes.
If your loan is a conventional loan, then it is subject to the rules of the Home Valuation Code of Conduct (HVCC). Barb Torres, an accredited senior appraiser says, "As soon as the parties find an appraiser is coming out who is not familiar with the local market, they have every right to contact the lender (preferably in writing) to DEMAND a local appraiser be used."
* Supply a list of comparable sales.
Ask the agents involved to put together a list of recent comparable sales that justify the agreed-to sales price. Submit that list to the underwriter and ask for a review of the appraisal. Also, ask the agents to call the listing agents of pending sales to try to find out the actual sales price of those properties. Listing agents do not have to disclose the sales price, but many are happy to help out because they could find themselves in the same situation.
* Cancel the transaction.
Many purchase contracts contain a loan contingency. If the appraisal comes in low, the buyer does not qualify to buy the property at the agreed-to terms in the contract. A properly written loan contingency allows the buyer to cancel the contract and requires the seller to release the buyer's earnest money deposit.
Kootr--the following is what I have found on several sites with respect to low appraisals. I will of course get the final answer from our agent when the contract is presented. The primary contract is an FHA loan whereas the backup will be conventional.
* Buyer can make up the difference in cash.
The lender cares about the appraisal only to the extent it affects the loan-to-value ratio. A low appraisal does not mean the lender won't lend. It means the lender will make a loan based on the ratio agreed to in the contract at the appraised value.
* The seller can lower the price.
If the home was overpriced or the value was inflated, often this is the best solution. It makes the buyer happy and the lender is satisfied. There is no guarantee that if the buyer walks away, the seller won't receive a low appraisal from the second buyer's lender, not to mention the time and trouble it takes to sell the property again. Sometimes a bird in the hand is best.
* The seller can offer to carry a second mortgage for the difference.
If the buyer really wants the home but cannot come up with the difference in cash, making payments or a lump sum payment at a later date to the seller is an option. After the escrow closes, sellers often retain the right to discount the second mortgage, sell it for less than face value to an investor.
* Order a second appraisal.
First, if your loan is an FHA loan, ask the lender for a list of approved appraisers. Either the seller or the buyer can pay for the second appraisal. Sometimes the second appraisal will come in higher than the first, especially if the first appraiser was inexperienced or made mistakes.
If your loan is a conventional loan, then it is subject to the rules of the Home Valuation Code of Conduct (HVCC). Barb Torres, an accredited senior appraiser says, "As soon as the parties find an appraiser is coming out who is not familiar with the local market, they have every right to contact the lender (preferably in writing) to DEMAND a local appraiser be used."
* Supply a list of comparable sales.
Ask the agents involved to put together a list of recent comparable sales that justify the agreed-to sales price. Submit that list to the underwriter and ask for a review of the appraisal. Also, ask the agents to call the listing agents of pending sales to try to find out the actual sales price of those properties. Listing agents do not have to disclose the sales price, but many are happy to help out because they could find themselves in the same situation.
* Cancel the transaction.
Many purchase contracts contain a loan contingency. If the appraisal comes in low, the buyer does not qualify to buy the property at the agreed-to terms in the contract. A properly written loan contingency allows the buyer to cancel the contract and requires the seller to release the buyer's earnest money deposit.
Now you know that just because someone is putting down a [conventional] 20% deposit does NOT mean that "the appraisal won't be a factor in the deal."
Mule--thanks for the offer and I'll be in touch--maybe we can get together for drinks or dinner when we come down for the house hunting trip next month. Right now we have about 30 listings saved on the BH website. The one my wife has her heart set on is in the Arden area in the development I mentioned in our previous email. Since we have this tomb paid off we'll be able to make a cash offer down there and as our agent BH agent says "cash is king". So I don't think we'll have any problems closing in under a month down there. Right now I'm trying to talk the boss into letting me continue working down there for a few months into next year so I can transition slowly--retiring too fast might be deadly--but what a way to go!
Sounds good to me. Just drop me a line. I probably have one trip to DC around the middle of next month, but that would be up one day and back the next during the week. And we Mules celebrate our anniversary at the end of the month. Otherwise, the month is open.
If you need me to do a drive-by of any houses (with a camera, not a weapon), just let me know.
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