Desktop only appraisal? Private Money Lender (loan, escrow, approve, rate)

[hammy5]

Our buyers private lender said they did not approve his loan due to a low appraisal. I knew nothing of this, it was never mentioned to me and buyer wants to back out and get escrow money back. However, I believe they must have only done a desktop appraisal because I was never informed an appraisal actually even happened. Can HML's use a desktop only appraisal and deny because of that? And would I, the buyer, be allowed to know that an appraisal had actually been done? Shouldn't I be aware of something like that?

[Zippyman]

Originally Posted by hammy5

Our buyers private lender said they did not approve his loan due to a low appraisal. I knew nothing of this, it was never mentioned to me and buyer wants to back out and get escrow money back. However, I believe they must have only done a desktop appraisal because I was never informed an appraisal actually even happened. Can HML's use a desktop only appraisal and deny because of that? And would I, the buyer, be allowed to know that an appraisal had actually been done? Shouldn't I be aware of something like that?

Hard money lenders often use avm's to see if a property is even worth a "real" appraisal. A "real" appraisal can be a drive-by too, and many appraisers in my area have their own e-keys, so they can access vacant homes without begging an agent. So you might not even know that a real appraisal was done. As a seller, what you can "allow" is specified in your purchase contract.

The buyer often clearly states in the purchase agreement that they will "apply for a 30yr fixed loan with $xx down at a rate not to exceed x% within x days of offer acceptance". - if they complied with that & didn't get a loan at the stated rate & term, then you're done. Get the denial letter & release the funds & remarket the property.

Fwiw, a hard-money-lender offer isn't nearly as good as a "conventional" offer - they're basically loan-sharks & the terms are awful - the only time it makes sense to use hard money, is if the buyer is planning on flipping the property. The other side is, a hard-money offer shouldn't tie up your property for long, I'd expect a two-week close at most. Anyone trying to tie the property up for longer than that isn't qualified to buy a bike at Walmart, they're most likely late-night TV addicts looking to make a fast buck based on some "system" that requires the seller to take all the risk.