[briansgi]

I sold my house and the closing was scheduled for this Thursday. Got an email from my agent stating it's now been delayed till middle of next week because "VA underwriter wants more comps". So on Tuesday, two days before closing the closing is postponed because the VA underwriter wants more then 3 comps. My question is this, how long does it take to get comps sent to this VA underwriter? Why the delay of one week on the closing for needing more comps? Also, there was an appraisal done, why doesn't the VA underwriter use the appraisal that is sitting in front of him/her? If the VA underwriter is the one who ultimately determines what a home is worth, why does the buyer have to pay for an appraisal? This simply doesn't make sense to me. Can anyone shed some light on this? Thanks!

[Goodpasture]

Not having been appointed to the VA panel, I am not all that sure what their underwriting guidelines are. but more than likely, what has happened, is the appraiser did his/her job. They found comparables that supported the value on the appraisal, developed the final opinion of value, and delivered the report.

Now the underwriter has run an AVM (Automated Valuation Model) which uses mass appraising algorithms to establish a regression line. This is very similar to how the tax assessor establishes the taxable value of your house. (A regression line is the mean developed on a scatter graph made of of sales in your neighborhood) Your house price is probably outside two standard deviation points (95% of points on a scatter graph will lie within 2 standard deviation points of the mean). Which means the average sale price is substantially different than your sale price. So, having pulled this AVM report and finding it to NOT support your sale price, the underwriter is seeking reassurance that the value really is there. Two additional comparables should do that. Whether or not the appraiser is anxious to do it or can do it is another question. Depending on where you are (what your neighborhood is) there might be a problem finding two additional house sales that are truly comparable (where the potential comparable sale is proximate, recent and similar). If there aren't any in the neighborhood, they might very well have to expand the search to the market area. If so, it might not even close next week.

[Annemieke Roell]

It is asinine to rely on an AVM to prove the appraised value. An AVM not only contains dubious data, it includes ALL sales, including REOs.

[briansgi]

Thanks for the info, it's very helpful and makes sense! I guess it boils down to the appraiser didn't do their due diligence in having other comps outside of our housing addition. You would think all appraisers would know how the VA works and would supply plenty of supporting comps.

One other question, the buyer is supposedly putting down in excess of 20% down, borrowing 80%. So since he's putting so much down, why is the VA underwriter needing this additional info, shouldn't they just be concerned the value of the house is equal to the loan amount?

[karibear]

Judging by my experience last year, it may be difficult for an appraiser to find true comps in your area. The appraiser who did my house - and I, as the buyer, had to pay the appraiser - did it over 3 times, at least. And the lender will only lend a percentage of the final appraised value, not the full sale price.

[Goodpasture]

Originally Posted by briansgi

One other question, the buyer is supposedly putting down in excess of 20% down, borrowing 80%. So since he's putting so much down, why is the VA underwriter needing this additional info, shouldn't they just be concerned the value of the house is equal to the loan amount?

Actually none of the secondary market participants wants real estate. so when and if they foreclose, they want to discount it and sell as quickly as possible. Traditionally that has been 20% below "retail" market prices. Thus they only finance 80% (although the VA will finance 100% if you have really good credit). What they are concerned with is that the country in general has been in a declining market. so the house that sold, in some markets, two years ago for $200,000 is now worth maybe $150,000. Consequently they want to be absolutely sure that it is worth what is being paid so their collateral is secure......that in the event of foreclosure they can at least recoup what they have loaned on it.

[Raelyn28]

Just a little of my own information here. We are also in the process of selling our own home. There is a lot of competition as far as homes being sold. I have been told that people are getting really picky, cheap and trying to low ball sellers because they think they can get anything dirt cheap because of the economy and because of all the homes available. Also, the lenders are getting REALLY picky with the loans because of so many bad loans. It may not be anyone's fault just our messed up economy. It can be very frustrating to those of us who are in situations where we have to sell our homes..

You seem like an awesome person Brian. Hang in there, you will get it sold. Just realize you are not in this along either.

[briansgi]

I appreciate everyone's feedback on my situation! I have another question though. Our closing was suppose to be on 7/9 but has been postponed to "middle of next week" supposedly, but that is just a guess it appears. I read my contract and it states the contract automatically extends an additional 5 days if there are delays for financing. So, the contract will still be in affect until next Tuesday at midnight. Assuming we do not close next Tuesday, what should I expect or do with the buyer? Do we renegotiate a new contract since the original one would then be null/void? Or do we simply extend the closing date out with everything originally agreed upon still being in affect? I just don't want to stay in this limbo state not knowing when the VA underwriter is going to make a decision. I realize the buyer already has well over $1000 in inspection fees, appraisal fees, etc., so it's in their interest to get this deal done and get the house closed, but I'm not willing to wait on them indefinitely either. I'd ask my realtor her advice but I already know what the answer will be.

[karibear]

The sellers of my place decided after they'd signed an acceptance of my offer that they didn't like the appraisal amount, and dragged their heels as much as possible to the closing. Finally my agent said "What part of signing a contract do you not understand?" And their agent said if they didn't close on schedule they were risking a legal suit and would at the least have to repay everything I'd spent already. They finally closed, but it was on the very last day.

[briansgi]

Originally Posted by karibear

The sellers of my place decided after they'd signed an acceptance of my offer that they didn't like the appraisal amount, and dragged their heels as much as possible to the closing. Finally my agent said "What part of signing a contract do you not understand?" And their agent said if they didn't close on schedule they were risking a legal suit and would at the least have to repay everything I'd spent already. They finally closed, but it was on the very last day.

Interesting, I was never shown what my house appraised at, I guess since I did not pay for the appraisal, the buyer did.

Anyway, I talked to some VA loan person this morning and it looks like everything now is on track. They removed the VA underwriter who was working the buyers loan and now someone else is working the paperwork and assured me the closing would occur probably no later then next Friday. So I'm feeling much better now!