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Old 08-14-2017, 08:03 PM
 
Location: Needham, MA
7,911 posts, read 12,375,884 times
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Quote:
Originally Posted by htfdcolt View Post
Your "out" is the bank appraisal which is implicit in the mortgage contingency. If the bank appraisal comes in below the agreed upon selling price, you can either (A) walk away, because the bank will not give you a loan of $XX based on whatever % your down payment was, meaning the mortgage contingency is triggered or (B) renegotiate the selling price down with the Seller. Sometimes, especially if you think you overpaid, the Seller may also choose to negotiate down rather than put the house back on the market, and risk the same thing happening again with another Buyer.
I wouldn't put all my eggs in that basket. The appraisal can quite easily come in on target (even if you overpaid).

Quote:
Originally Posted by htfdcolt View Post
Interestingly under the new mortgage rules, the appraiser is an independent 3rd party who (in addition to pulling the usual comparatives) interviews the Seller's listing agent to have him/her justify the selling price. I didn't realize this until we ourselves bought our house in MA within the past year. It does seem like this practice acts as a safeguard against overpaying. Plus, in this market, that too in Bedford, unless you sell in less than a year, you will no doubt come out ahead despite the $25K premium.
Those rules aren't so new anymore. They've been around for a while now. Personally, I don't think preventing the loan officer from speaking with the appraiser has made them any more an independent 3rd party than they were before.

What it has done is slowed the process because it's now impossible to light a fire under an appraiser. It's discouraged people from becoming appraisers because the fees have been slashed. Plus, it's created an unnecessary middle man called an appraisal management company (AMC) that bloats the cost of the process and adds nothing to it. The consumer pays for it. Trust me. The cost of an appraisal is considerably more now with these rules in place than it was before and the appraisers are actually getting less money. It was far worse though when AMCs first came into being. They were killing deals left and right by sending in appraisers from NH and RI to appraise properties in Boston. These appraisers didn't know Main Street from Elm Street if I gave them a map and they're supposed to judge the value of a home in that town. That's seemed to have died down now though. Rant over.

Quote:
Originally Posted by Dm84 View Post
The appraisals are a joke. As long as you don't offer twice the asking price the appraisal should come back just close enough to meet the target.
Appraisals are far less scientific than most people realize. Plus, the appraiser gets a copy of the contract. So, they know what the sale price is before they submit the report. It's not shocking that most properties appraise at exactly what the person is paying for them. Appraisers don't want to miss that mark because with the AMC's involved there's a ton of paperwork that needs to get done and questions that have to be answered if a report comes back too high or too low compared to the contract price.
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