Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
As far as I'm concerned, you are now getting the house for 20k less and getting some painting done. What other position can the bank take? Do they think you are so emphatic about buying the house (in this market) that you will pay 20k more (plus interest for the life of the loan) and the cost of the paint? manderly6 nailed it!
You guys don't think the bank will just laugh off the low appraisal and throw out our contract entirely? Granted, it's now been on the market 80 days with no other offers but is it worth taking a $20k price reduction (20%) to be rid of it?
Just curious, is "your" agent, actually your agent, or are you working with the listing agent? A buyer agent and listing agent have different priorities. Also, be sure you are looking at recent sold comparables, what has not yet sold does not count in an appraisal.
As advised above, your first plan of action should be to request the bank meet the lower appraised price. The bank is going to be stuck with the FHA appraisal for awhile, so unless they intend to find a cash buyer that will ignore the appraisal, they won't be selling soon if they don't lower.
You guys don't think the bank will just laugh off the low appraisal and throw out our contract entirely? Granted, it's now been on the market 80 days with no other offers but is it worth taking a $20k price reduction (20%) to be rid of it?
If the bank expects this property to sell via FHA financing they will have to address the peeling paint. FHA never allows loan approval for peeling paint on a FHA appraisal. You have nothing to lose by petitioning the bank to match the sales price with the appraisal price and FHA appraisal requirements. It is unclear from your post if you have actually done this.
You might take a trip to the county courthouse to see at what loan level the property was repossessed. That will tell you how much the bank needs to get out of it. If your first petition is denied, don't give up. Banks need to get these properties off their books as RE values are not going up anytime soon.
You guys don't think the bank will just laugh off the low appraisal and throw out our contract entirely? Granted, it's now been on the market 80 days with no other offers but is it worth taking a $20k price reduction (20%) to be rid of it?
Been there, done that, and yes the bank will take less. With an appraisal in hand the bank will most likely do one of two things, accept the counter offer matching the appraisal or order another appraisal. The bank will also rely on the listing agents input, may ask them for new comps. Either way the OP may get their house. Make the counter offer, all they can do is say no and you are in the same spot you are now. But you also might get your house!
Also, have you read the bank addendum you signed? Some banks have started putting in language that the buyer will make up the difference between purchase price and a lower appraisal. If that's in your addendum, I can understand why your agent would fight the appraisal.
No, its our agent not the listing agent. But we all agree its worth more than the appraisal... no one is just trying to get us to pay extra just to line their pockets (I am sure of this )
The appraiser listed 3 sold properties and 2 unsold as comps because there just aren't alot of properties in the area for sale and never have been (3-6 sales a year is average) 2 of the 3 sold properties are totally unsimilar in every way (smaller, different styles, worse condition, different area of town) but still sold quickly for more than he valued ours at and the third is passable as a comp but the appraiser took $15k off it's value (was sold for $99.5) because it sold last summer 'when the market was better' despite not 2 pages later saying this area has seen no market fluctuations due to the economy. The 2 unsold comps are dilapidated shacks both listed as needing major repairs (both have foundation and roof issues, plus no central heat and air or other updating) and both are priced just over what he valued the house we want at. It makes no sense.
If the bank refuses to lower the price to the appraised value and cancels our contract (we are challanging the appraisal first because like was mentioned the appraiser was not familar with this area and made a note about all the comps and our home being too old to have any real value, but will ask the bank to lower the price if a second appraisal is similar or if we cannot get one) and then the house sits on the market for several more months would we be allowed to submit another offer at that point?
No, we are allowed out of the sale if the appraisal isn't as high as the offer (because its been on FHA terms the entire time and I assume that is a loan to value rule?). We really don't care about the appraised value at all and wouldn't have offered what we did if we didn't think it was worth it, its just that we can't get the loan with a $20k difference (and we don't have that in cash).
The records I was able to find (this is in Texas and it appears sale prices are not public record) show the house selling in a FSBO for $140k in 2005 then being transferred to the bank in April of this year for $55k (the circumstances of either I don't know and it seems unlikely the PO would have paid off $85k in 5 years only to have to foreclosed on).
...If the bank refuses to lower the price to the appraised value and cancels our contract (we are challanging the appraisal first because like was mentioned the appraiser was not familar with this area and made a note about all the comps and our home being too old to have any real value, but will ask the bank to lower the price if a second appraisal is similar or if we cannot get one) and then the house sits on the market for several more months would we be allowed to submit another offer at that point?
It's not the bank that will cancel. It should be your option to cancel or not, which will be likely if they don't lower the price since you won't be able to get financing. Be sure you stay in the timelines of your appraisal and financing contingencies.
I don't understand why you wouldn't request them to lower the price as your first move. If they say no, then you have to decide what to do next. And perhaps they will agree and you get a great deal.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
) 
