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Appraisal question

By Amy H. Guinn

Real Estate Agent with EXIT Realty Platinum

March 04, 2008 07:17 AM

I have recently had a problem with an appraiser reporting a house as "poor" condition. Because of this the lender would not loan on the house and the deal fell through. The house is about 90 years old and has seen better days, the buyer was aware she was buying it "as is". This is the first time I have encountered this problem, the house appraised for slightly higher than purchase price and I thought that is what is important. Is this something that has come about because of the tighter lending practices, or has this always been the case and I was just lucky enough to not encounter it before? We have a number of older houses in this county and this could be a problem for me in the future.

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Melina Tomson

Tomson Burnham, llc Licensed in the State of Oregon - Salem, OR

Principal Broker/Owner, M.S.

Appraisers have always noted the condition of the property before. I just think that lenders are actually paying attention to it nowadays where they ignored it before. I'm starting to hear more about this issue.

Mar 04, 2008 07:21 AM

Kimberly Dotseth

Blend Real Estate, broker/owner - San Diego, CA

Try Our "Cancel Anytime" Listing!

Appraisers are being far more cautious because lenders are being far more difficult. That said, I would have had the seller offer to pay for another appraisal with a neutral, third party appraiser to see what comes up that time. It's a $350 cost or so, but it could offer the lender another perspective. I realize the deal has already fallen through but for next time, keep in mind: there is no law against getting a second appraisal. I have done it before when the appraiser just seemed to not get the house or neighborhood or improvements. Ultimately it's up to the lender to interpret the appraisal or appraisals as they see fit. I have had lenders accept the second appraisal and there's no pressure at all from any party. Just another perspective. But I think the laws are changing where mortgage brokers or agents/broker cannot have a say in the chosen appraiser. I think it's going to be up to the lenders to chose appraisers. I read it this morning.

Mar 04, 2008 07:32 AM

Orlando J. Valero

Valero Associates Appraisals and Sales - Clifton Park, NY

Appraisals and Sales

Due to the obvious mortgage market conditions, everyone is pointing fingers and nobody wants to take the blame. Based on your statements, it sounds like you should have a problem with the Lender and underwriter, not the appraiser, due to the underwriter "pointing the finger" at the appraiser and saying he/she used the word "Poor", so the lender will not lend on that property, thus relieving the lender from blame. The appraiser's job is to estimate the Market Value of the property and it is up to the lender if they want to loan on that property, no matter what condition it is in or stated to be in (poor, fair, average, good, etc.). Bottom line looks like there may have been deeper issues and reasons the lender did not want to close the loan and the easiest thing to do was to blame the appraiser for using the word "poor", especailly if the market value of the collateral was sufficient. This is very very common, since the appraiser is, 95% of the time, an indendent contractor and has no idea if the loan closes or not and/or why.

Just some food for thought...the appraiser didn't say the property wasn't worth the sales price and the appraiser didn't decline the loan..should he/she be to blame???

Mar 05, 2008 06:02 AM

Sherry Connor

Myers Park Mortgage - Charlotte, NC

I have had this happen to me a few years ago. Same story same issue. To resolve it, I was about to do a Construction Perm loan. Not sure if that is available on this house. Hope that helps.

Mar 05, 2008 06:19 AM

Anonymous

Amy Guinn

Orlando,

You have some good points in your response. I would think a large part of the problem for this loan is the purchase price of $22,500.00. No one is making any money on an amount that low. Thanks for your thoughts.

Mar 05, 2008 06:40 AM

Sheik

I would agree with Mr Orlando, what appraiser should really do is to do a true reporting, no more no less. If the lender feels that the borrower is not fit to buy the property, then it isn't your fault, in fact you have done him a good job by letting him know the true condition and the fair value of the house. The lender in many some cases resorts to carry an estimate of the forced sale value of the house and may decide to fund a lower amount of loan. Well, that what I think it should have been. Thank you.

Jun 09, 2008 01:06 AM

Melody Botting

Broker Associate PenFed Realty - San Antonio, TX

You Deserve The Best

It has happened to me. An appraiser is non-biased so you pretty much get the black and white. Do not hesitate to contact them yourself.

Jun 09, 2008 01:42 AM

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Amy H. Guinn

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