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Old 07-23-2009, 07:38 PM
 
78 posts, read 178,386 times
Reputation: 33

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I know we have a bunch of real estate professionals on here so I thought I would post this here.

I am in the process of putting my house up for sale and am now a little concerned. My neighbor had a ranch that he put on the market and sold it within a month for close to the asking price. When I spoke to him tonight, he said it fell through because his appraisal came in about 10k short of the selling price. When they did the comps, they compared it to a recent sale in the neighborhood. His house has about 15K worth of landscape upgrades not to mention crown molding plus numerous other things the other house did not have. Those were not taken into consideration.

So now I have a huge concern with the sale of our home. My neighbor was told this is happening all over due to a recent change in the industry? What gives? He mentioned that the buyer was trying to get him to drop his price to the appraisal level and when he declined, they wanted him to pay a commission to their agent as well as cover other fees. Obviously he declined on all counts and they canceled the sale.

Has anyone else run into this issue??
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Old 07-23-2009, 11:45 PM
 
Location: Dallas/Ft. Worth, TX
2,309 posts, read 6,812,495 times
Reputation: 3913
Hello GuitarPlayr,

There have been a new set of appraisal rules instituted called the "Home Valuation Code of Conduct" (HVCC) that have caused some issues in the appraisal arena. If you google search it there will be LOTS of references to it. You can read about the problems it has caused so far.

Not all appraisals have been hosed as a result of the new HVCC rules but unfortunately the issues are still surfacing.
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Old 07-24-2009, 07:56 AM
 
32,627 posts, read 51,232,810 times
Reputation: 18501
when we had our home appraised this past October--it was because the seller was refusing to drop his price--this was about the time the market here was really starting to stall--a few months before we had bid on a house in Colleyville and there were multiple offers that were OVER the list price--
this house was in Hurst which was different ball game so to speak and he was sitting on his asking price basically even though it was well above comps in the neighborhood---

BUT there were several foreclosures and spec houses that had stalled when they were up for sale so builders had reduced price which had influenced the price per sq ft of past sales...it was difficult market to quantify also because the lots vary a good deal because of elevation...the lot for this house was larger and flatter--more than large enough for a pool--and had a good deal of privacy...

we got an appraiser with years of exp in the local area to prove to the seller that his price was too high--
the appraiser runs his appraisal three different ways--one based on HIS physical inspection of the property vs comps in the area---one based on what it would cost to rebuild the house--and I forget what the third one is...
anyway...all three appraised values came back less than what the seller was asking...
it is very difficult to get appraised for more if you do things that add extra value like landscaping (unless there is a pool) or other extras that you paid more for in most cases...

higher priced tile like natural stone/marble/terrazo with intricate inlays vs ceramic/porcelain tile that is more plain just does not show up as $5 a ft more valueable even though you might have paid twice as much to have a shower/bath tiled that way
having a 6 burner top of the line Viking stove is not necessariy giving you a $ for $ valuation increase over a Jenn-Aire or GE one...

because the seller had done things like used engineered foundation with piers under the slab vs just a floating slab---but a working foundation is just that--a working foundation
one does not have more value in the appraisal process than the other

house had significant number of roll-out shelving in kitchen cabinets vs standard ones--but again that is not something that translates in higher appraisal value even though you pay more to get them when house is built

had a lot that had perceived value beyond just the sq ft because of its flatness and privacy--a lot is a lot and is valued on sq ft

the lower appraisal price did get him to come off his price somewhat but he would not lower the selling price to what the appraisal price was--and to some extent he was right--I would not have bought any of the other houses that were for sale in that neighborhood because their lots were elevated and most did not have piered foundations, tight driveways, smaller lots, and had almost no privacy...
and other factors
so we did pay more than the appraised value vs just walking away from the sale...
(frankly I think he would have found that the house lingered on the market and might have been ready to drop his price after a month or so--they were going through a divorce--BUT he might just have bought her out and continued to live in it until the market improved and we would still have been looking...my husband was really tired of doing that...

Last edited by loves2read; 07-24-2009 at 08:05 AM..
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Old 07-25-2009, 02:44 PM
 
Location: Dallas/Fort Worth, Texas
4,192 posts, read 14,079,724 times
Reputation: 2654
Quote:
Originally Posted by GuitarPlayr View Post
I know we have a bunch of real estate professionals on here so I thought I would post this here.

I am in the process of putting my house up for sale and am now a little concerned. My neighbor had a ranch that he put on the market and sold it within a month for close to the asking price. When I spoke to him tonight, he said it fell through because his appraisal came in about 10k short of the selling price. When they did the comps, they compared it to a recent sale in the neighborhood. His house has about 15K worth of landscape upgrades not to mention crown molding plus numerous other things the other house did not have. Those were not taken into consideration.

So now I have a huge concern with the sale of our home. My neighbor was told this is happening all over due to a recent change in the industry? What gives? He mentioned that the buyer was trying to get him to drop his price to the appraisal level and when he declined, they wanted him to pay a commission to their agent as well as cover other fees. Obviously he declined on all counts and they canceled the sale.

Has anyone else run into this issue??

This is not new at all and NO it's not happening all over. The standards have been tightened just like mortgage loan requirements guidelines have been tightened too. Loan officers cannot select their own appraiser where they know that he will influence the value of the appraisal.

In my opinion, appraisers should never be told what the contract price is but I don't think that is ever going to happen.

As far as the buyers asking him to pay the agent and other fees, that's just ridiculous. He did the right thing.

How did he come up with his asking price? Did he have a Realtor? This is where our services are crucial to avoid all this by crumbling down. The home can be updated with the latest but some items are just not going to affect the value but will make the home more desirable compared to the competition.

Also, appraisers will only take into consideration foreclosures IF there are no other comparables in the neighborhood and they will make adjustments according to the condition.

Naima
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Old 07-25-2009, 04:15 PM
 
32,627 posts, read 51,232,810 times
Reputation: 18501
you don't have to sell your house for any less that you want to

BUT some people are not willing to conceed that housing prices in some areas are lower and some houses are languishing because the mortgage rates right now are making it difficult for people to qualify now that income is actually being verified...

some homes aren't worth what their owners are asking
and landscaping in and of itself can't compensate for other factors that might be negatives to buyers...

your seller can't make someone buy at his price...
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Old 07-31-2009, 08:04 AM
 
Location: Georgia
12 posts, read 29,355 times
Reputation: 19
Exclamation Real Estate Appraisal

Since 12/08, I've tried to refinance my house, to a lower fixed 30 yr mortgage rate. I've cleared up my credit score, however---my mtg holder, Wells Fargo, plus all lenders want an APPRAISAL done! I've lost $700.00, on 2 bogus appraisals done! I've wrote my GA Congressman, plus filed 2 complaints with the GA Real Estate/Appraisers Board, over this, and I won't stop complaining until someone in the banking/home lenders group, or Congress listens & helps me. I've explained that with the lower home values, how can any home appraise for what you originally owed on it? No repsonse to that "no brainer" question. Right now, I'd settle just to "re-adjust" my loan, to a lower rate, without taking/adding any money on to my original principal. It seems that if BIG BUCK BANKS, will accept a Short Sale, they can re-adjust my mortgage by adding a small fee into the principal, and giving me a fixed rate for 20 to 30 years. Please advise me how you're doing on this problem.
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Old 08-01-2009, 01:55 PM
 
Location: Dallas/Fort Worth, Texas
4,192 posts, read 14,079,724 times
Reputation: 2654
Quote:
Originally Posted by pocketspc View Post
Since 12/08, I've tried to refinance my house, to a lower fixed 30 yr mortgage rate. I've cleared up my credit score, however---my mtg holder, Wells Fargo, plus all lenders want an APPRAISAL done! I've lost $700.00, on 2 bogus appraisals done! I've wrote my GA Congressman, plus filed 2 complaints with the GA Real Estate/Appraisers Board, over this, and I won't stop complaining until someone in the banking/home lenders group, or Congress listens & helps me. I've explained that with the lower home values, how can any home appraise for what you originally owed on it? No repsonse to that "no brainer" question. Right now, I'd settle just to "re-adjust" my loan, to a lower rate, without taking/adding any money on to my original principal. It seems that if BIG BUCK BANKS, will accept a Short Sale, they can re-adjust my mortgage by adding a small fee into the principal, and giving me a fixed rate for 20 to 30 years. Please advise me how you're doing on this problem.
You may want to repost your question on the mortgage forum. Many loan officers frequent it and may be able to assist.

Your post is a bit confusing. Did you get turned down for the refi because the house won't appraise?

Also, re-adjusting your mortgage by adding a small fee to the principal is called a modification. You have to prove hardship such as change in income that you can't afford your current payments before they consider you.

Naima
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Old 08-01-2009, 02:27 PM
 
78 posts, read 178,386 times
Reputation: 33
I met with an agent today in selling our home. I must say this whole process makes me sick. The realtor was telling me about "sellers contribution" and I was saying huh? So let me get this straight.

A new buyer comes in to buy my home.

1. They are getting a potential 8K incentive from the government if they meet the guidelines
2. They are going to want me to cover closing costs
3. I have to pay realtor fees
4. They now want me to toss in a "Sellers Contribution" of up to 3%-4% of the sales price

If anyone else on the board here would like some of my profits, speak up because they are going fast.
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Old 08-01-2009, 03:23 PM
 
Location: Dallas/Fort Worth, Texas
4,192 posts, read 14,079,724 times
Reputation: 2654
You are responsible for your own closing costs and the buyers are responsible for their own.

Seller contributions doen't mean that the proceeds come out of your profits. It can be structured where the sales price is bumbed by a certain amount. For example.

Agreed sales price is 200K
Buyers want seller contributions of 5K

Now you change the contract to 205K and the seller pays for the 5K. You are not our the cash and the buyers dont' have to pay those fees upfront. The house will have to appraise for 205K

Of course buyers are going to want the maximum to take advantage of this market so in the initial offer they may ask for the 5K to be paid for by the seller. Again, it's all part of negotiating and you don't have to accept anything.

Naima
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Old 08-01-2009, 03:32 PM
 
32,627 posts, read 51,232,810 times
Reputation: 18501
basically you are asking the mortgage company to front the 5K contribution--
frankly I think if the buyers can't afford to buy at the selling price plus the govt money IF they qualify for that--then they don't need to be asking for seller contribution to close...
they are doing exactly what people have been doing in the past--getting in above their heads...
they should negotiate a price THEY can live with--if the seller does not want to accept the offer then no deal...and both start the process all over
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