Real Estate Blog - The House Appraised for How Much?

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The House Appraised for How Much?

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I have to share this story of how a sale that got way off track, a few years ago, due to an appraisal problem on a house I sold in Port Orange FL.

It started with the Port Orange listing I had for a family I have known for many years. The buyer for their house was someone who went to church with them. After many twists and turns in her financing, she was finally able to close.

On the flip side, I was also working with the family whose listing I had, to help them buy their next home. We found them a nice house with some acreage, so they could start breeding horses. Negotiations went smoothly and the financing was going OK. But as things progressed, I was finding it more and more difficult to reach their mortgage brokers (husband and wife team). I would leave them cell phone specific messages, as the time frame for each contingency drew near and we seemed to be slowly pushing the bolder of the hill.

Then we got the appraisal. (Bear in mind, this was several years ago.) The sale price for the house was $225,000. The appraisal came in at $235,000! I have no idea why the appraisal came in so high, but the next thing that happens is, this out-of-state lender, decides to call for a 2nd appraisal. The 2nd appraiser is from out of the area and has no clue as to what our real estate market is doing. Now the appraisal comes in at $215,000! What the heck is going on?!?!

At this point, the lender decides they don't want to do the loan! My buyer owns his own business so needless to say, the loan process is not the fastest for this family. Now bear in mind, their home is sold and their buyer is ready to close. And now they have to start over with their financing, with mortgage brokers who don't like to return my calls. extend the contract closing date

They quickly obtain approval from another lender (same mortgage brokers) and are told they can close in 2 weeks. Do you think that happened? Of course not! It ended up being another 30 days. The seller is getting really nervous with all this lost market time! But she finally signs the extensions (there were several!).

In the interim, their buyer has closed on my buyers/sellers house and had previously told them she could wait the 2 weeks. But as the process continues to drag out and we're continually given a different closing date, she finally decides she can't wait any longer and wants to move into the house she has already bought.

clients waiting to close Now my family of 5 is living in a 5th wheel, in the back yard of a friend, and of course, they all come down with the flu, while waiting to close.

We finally closed and everything worked out fine. And yes, I'm still friends with that family =), But what a stressful 2 months that was!

The moral of this story? Please, please, please make sure you're absolutely positive your broker or lender is responsible enough to return phone calls, and for crying out loud, don't use an appraiser who doesn't know your local real estate market!

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Adams Cameron realty Port Orange FL

BUY HOUSE OR CONDO IN DAYTONA BEACH OR PORT ORANGE

Posted by Lisa Hill (Daytona Beach Real Estate) on 06/15/2007 10:24 AM

Comments (38)

mortgage, appraiser, appraisal, closing, lender, financing, real estate, agent, realtor, port orange, buy condo, daytona beach fl, lisa hill

Originally posted at: Daytona Beach Real Estate Blog: The House Appraised for How Much?

This post has been included in Florida Information Volusia County, FL Information Port Orange, FL Information

38 Comments on The House Appraised for How Much?

JUN

2007

Wow, amazing story Lisa.

I've heard a few horror stories from Paul and Dana since I"ve started working with them, and I think thats one reason why we have a few lenders we trust and work closely with and we try to push almost all of the lending business to them. We ended up loosing a listing to foreclosure because the buyer's lender went BANKRUPT at the last minute! Talk about crazy!

Thank you for sharing!

Lisa, This is some good advice (and I am a mortgage broker). Our company is only licensed in PA and we try to only use appraisers that we are familiar with and that are familiar with the area they are appraising.

YES! use local lenders, local agents, local everything! With us being way over here...different real estate laws and such...our client's waste so much time and energy searching for an online or mainland lender only to find out that there is NO such thing as a better deal and all lenders can try and match the other one....

Billy- That's unbelievable. The lender went bankrupt before closing? Man, that sucks!

Ann- That's good to hear. I've only that problem the one time, but I've been overly cautious since then.

Sally- Agreed! The internet is great for a lot of things, but for financing, it can be a major problem.

Lisa this is so very true - we have this happen more often than we would like in our rural area - or the out of town appraiser classifies a property incorrectly for the area making the loan impossible

depending on the type of loan the lender may call for a review appraisal. many times the review appraisal is done by someone local, but remember they are doing a review and they are paid to find discrepencies. very often this appraisal is done without a physical review of the property.

i do agree the internet may produce problematic results.

Lisa: You are so right a lender can make or break a deal. It doesn't even have to be an out of town lender it could just be an inexperience one that doesn't know what they are doing, I had that scenario a few years ago. My buyers with great credit closed a month late because of problems with their inexperienced friend lender.

JUN

2007

Marchel- You absolutely right. We have to be careful about EVERYONE who's involved in the process. Including home inspectors!

Jay- This lender called for a completely new appraisal. The first appraisal was probably right, since the values were escalating at that time, but I don't know why he didn't stick with the contract price.

Thesa- You mean they got the wrong usage?

Lisa - Local is definitely key when it comes to appraisers. I just reviewed an appraisal that was done by a guy from well outside of my area...the house was overvalued by $300,000! I've been appraising for a while now and never accept work in areas that I am not familiar with...it's called geographic competence and way too many appraisers take any and every order just so they can collect the fee, regardless of their familiarity with the market.

Matt- $300,000?!? Holy crap! That sounds like a fraud charge or law suit waiting to happen!

Lisa - Yup...$300K. The appraiser took this tract home and used two custom homes and a waterfront property as comps to justify his value. He ignored a recent sale on the same street and multiple others in similar developments...total disaster of an appraisal. At the very least my hopes are this guy will lose some business...who knows how many other garbage appraisals are out there with his name on it.

JUN

2007

It is so important to use local people for the loan and appraisal!

Our very first deal was with a buyer who chose to use eLoans. What a nightmare! They never answered the phone and rarely called back. We now encourage clients NOT to use them, and then offer a few local choices.

I've heard of stories like this - but luckily have not yet experienced it first hand. I have been involved in transactions where the purchase price was adjusted to accommodate the appraised value - which didn't slow down close of escrow.

When it comes to the appraisal, GO LOCAL. My best friend is having a hard time with this. She has a farm for sale in Pierce County and she keeps getting appraisers from 2 counties away coming to do the appraisal. They are not familiar with local quirks and standards.

And Matt's story makes my skin crawl. As a former appraiser myself, I am appalled.

I just bought a house and my Realtor worked exclusively with one local mortgage broker. Because of a lot of financial issues, I probably wouldn't have qualified for the mortgage without his help. He suggested ways to rearrange my debt through outside lenders that didn't get him a penny in commissions. The effort not only got me the home, but bettered my financial picture. I don't believe I would have had such great support without the relationship that my Realtor had with his lending partner.

1. If your local lender does a deal in another state, then that lender is not a local lender in that particular deal. Did that make sense? Point is: Location has 0% of that lender's ability to provide quality service.

2. The second apraisal sounds like an 'appraisal review'. Lenders do those a lot these days. They used to also do them when they were looking for a reason to deny a deal.

They really don't realize the importance of a local lender just for this example! Thanks!

Use your local professionals as much as possible. I'm helping a family member in GA refinance their home and i'm in Mich. The good part is the lender is across the hall from me so i can keep a watchful eye on the transaction.. Robert

Local lenders are the only way to go! I really like knowing that I can go sit on someone's desk and demand performance if things get complicated. Also, if they don't have a local reputation to protect, what is their incentive to always provide the best service? My favorite quote about dealing with lenders is to make sure they are located "within choking distance."

great post

Great advise and story.

Wow....what a mess. I can imagine living in close quarters and getting sick. I was there. It's no fun!

More and more we having to go to appraisers for to check and balance a Seller's equity in our Buyers market. Thanks for your story.

Vicki- "if they don't have a local reputation to protect, what is their incentive to always provide the best service?" Great point!

And thanks everyone!

Nice post, we all have had that type of closing I missed a couple dates because the seller was in detox! I finally worked out a power of attorney with the son.....

I like dealing with locals - people that answer the phone, people that can shake my hand, people that can run out last minute if there is a problem. I've had problems with non-local appraisers who are assigned by relo companies.

It doesn't matter whether they are local or not, if they don't return phone calls or return emails, they aren't worth a tinkers dam. I lend in a lot of different states, and I will say I am darn good at my job, whether the real estate agent is down the street or across the county, to me the principal of communication is the same!

JUN

2007

David- I assumed all out-of-state lender were not the same. That's why I made sure to say that they should be sure their lender or broker will return there phone calls. =) However, I don't see any reason to EVER use an appraiser from out of the area. That's just asking for problems.

An appraiser should never do an appraisal on an area they are not familiar with.

I am sure more than one broker can back me up with review appraisals ordered by underwriters, you never know who they will use or who they are going to get; when a value looks too good to be true, expect a review. It wouldn't matter if the broker was down the street or across the state.

JUN

2007

Lisa.... since I am a lender that can do loans in most states, I disagree with your statement and so many other's. David Doerr nails it on the head with his statement. I am extremely good at what I do also. It comes down to communication, being very knowledgeable, and responsive. ie... returning calls.

I understand many realtors concerns when dealing with a lender out of state, because of all the horror stories. But there are local horror stories just as well. Just that less people talk about them. EXAMPLE : I am closing a women next week from Florida and I am from New Jersey. She has been with her current lender since January. She kept her faith in him because he has helped her on two previous transactions and was making every excuse in the book. And he is extremely local to her. Me? It will have taken me 3 weeks from start to finish, on a semi rough deal. And it's closing. Oh yea.... she got my name from reading a few of my blogs. But I am out of state. I have done mortgages in 7 different states, very successfully.

Overall.... I know you are just making a statement. And I know realtors are usually against out-of-state lenders. But you know what,.... a bad lender will be a bad lender, locally or distant, just as a good loan officer will be great. We need to educate people correctly because comments like these could hurt future business for both David D. and myself. Just my .02.

In any case.... a good story from people to learn from.

jeff belonger

Jeff, I hope you saw my comment to David. But maybe I'll change the wording a little bit.

David & Jeff, I changed the wording :)

JUN

2007

Lisa..... it does sound better..... but in all honesty, I don't mind if someone wants to mention their opinion is not to use outside lenders. As long as they disclose that this is not every lender or loan officer that does this or acts this way. The main point.... it could happen with lenders near or far, that's all. thanks though....

jeff belonger

Jeff- Well I really don't want to hurt the chances of you guys getting business.

nothing wrong with honesty and opinion, as long as it is broken down and explained...both sides. Again, just my opinion. Because it does happen as you explained with out of state lenders. But as in my example, it can happen to people with lenders in their back yard also. I see both happen often. thanks again for understanding.

jeff belonger

JUN

2007

Lisa,

Thanks for the change.

Jeff,

Thanks for having my back! Sucky loan officer suck if they suck across the state or if they suck across the street, or in some cases across the hall. It isn't the distance it is the person!!!!!!

JUN

2007

David- So you're saying some people just suck? =P

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