Breaking the bad news, VA Appraisals and Tidewater Initiative

By
Mortgage and Lending with Bank of Oregon a division of Willamette Valley Bank

I'm sure we've all been there.  We are just DREADING giving our clients, or the business partners we're working with, some bad news.  Maybe their loan got denied, or the property needs extensive repairs, making it currently "unlendable".

Well, I just had to give the Realtor and my borrowers some less than thrilling news.  I have a VA purchase transaction that I have going and I just received the appraisal report and Notice of Value.  Very disturbing news as the value came in $100,000 less than the asking price. 

In analyzing the report, there were comments from the appraiser that the "Tidewater Initiative" was enacted.  In all honesty, I had never heard that term before, but a quick Google search on the subject informed me that a VA appraiser is required to contact the listing agent for comparable sales, should he/she feel that the value will come in less than the contract price. 

 

 Of the six comparables the listing agent provided, only two were sales...the rest were current listings.  (Obviously, more weight is going to be put on actual sold properties).    So, Mr. Appraiser utilizes one of the comps the agent provided, the remaining comps (6 total) were obtained by the appraiser.

When the dust settled, value was $100,000 less than the purchase price.  Now, I'm not an appraiser (nor do I play one on tv), but based on the comps and adjustments he used, the report really doesn't seem that out of line.  Not to mention, the current owner purchased the property in the summer of 2006...the HEIGHT of the Real Estate market.  It's not uncommon at all to see a 25-35% drop in value from the height of the market.  In this case, it was a 33% reduction.  Based on the contract price that was negotiated, it would have only been a 14% reduction from the 2006 sales price. 

I was really hoping that buyer and seller could "play ball" and possibly renegotiate.  Was informed there was a backup offer, so most likely, the seller will bail from any additional negotiations on this deal.  I certainly hope the agent informs and educates the sellers that there is still the possibility of a significant risk in appraised value on any new negotiated sale. 

 

© Karen Burket - Bank of Oregon 

 

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Anonymous
Todd Barth

Thanks for the great info on this as i just got a VA Appraiser and lender call me on this and neither me or the Bank knew what it meant. I was already in the process of sending comps to substanciate the Value of the home.

Also once a VA appraiser comes in outof whack you can Contact the VA office and do a "Value of Opinion" with them. To disbute the Value as I have done this on another deal. This can take 2 weeks though.

This Tidewater initiative is definitely better to give the Agent a chance up front to Show the value of the house.

Todd Barth

Sand Dolar  Realty

http://FlStopforeclosure.com

May 10, 2011 10:21 AM #1
Rainer
142,616
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Thank you Todd for the visit and I'm glas you found this helpful!  Thank you also for the information on the "value of opinion".  I'll be sure to remember that!  Make it a great day and all the best to you.  Hope your deal holds together!  Best of luck!

May 10, 2011 10:31 AM #2
Anonymous
Wrn

Many Veterans want the Seller to pay for ccs and pps because they dont have the funds and this is the only way that they will get into the house. So, the Seller increases the sales price to accommodate the request. While some may think this is a bad idea, they need to realize that this means the Veteran is basically saving money, even renters pay 1st, last and deposit upfront. So, if they pay a little more than true value, they themselves are benefiting from it, not the Seller. So, I don't really understand how a VA appraiser can invoke this when he gets the copy of the contract which clearly shows the Veteran benefitting from the increase. So think of it this way, instead of paying those fees upfront, they are paying them over the life of the loan.....the Veteran has lost nothing and gained their very own home.

Sep 01, 2017 09:29 AM #3
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Rainer
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Karen Burket

Valley Mortgage Grou, Conventional, FHA, VA, mortgages
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