Ar_home_b_search
 
The buyer of an REO property backed out of contract.

My clients moved into first position.

My buyer's bank has to approve the loan based on the appraisal that they order. If the bank doesn't approve the loan, my buyers will back out, too. When my clients' bank's appraisal was completed, it was at $175K, which is less than the $228K my clients' offered price.

We presented the appraisal to the REO agent, who countered that the previous buyer had an appraisal done, and it came to $210K. In this price range, the $35K gap between appraisals is significant.

Since the appraisals were completed just days apart, whose appraisal will carry more weight -- the appraisal for the buyer who backed out, or the appraisal for the buyer who is now in contract? We are trying to get the foreclosing bank to revise the sales price downwards.

This reminds me of series of pictures that shows how different people view a home



UPDATE: The bank agreed to have my clients buy the house at the appraised value of $175K.
 
This post has been included in California Real Estate News Alameda County, CA Real Estate News Oakland, CA Real Estate News
Post is included in group: Dedicated Bloggers
Post is included in group: Diary of a Realtor
Post is included in group: REALTOR LIFE
Post is included in group: Realtors®
Post is included in group: REO

14 Comments on Two appraisals, same REO property. Significant difference!

NOV
20
2008

great video, havent seen that one for a while. the answer to your question is that the most recent appraisal carries the most weight, as new sales info comes up on mls and public record on a daily basis. i betcha the first buyer is even happier they backed out now!
12:49am • #1
320,285 Points 5 Featured Posts Outside Blog

I see numbers all over the board. An Appraisal is an opinion based on facts. How can you ever get those 2 together? Hard!
5:17am • #2
461,861 Points 47 Featured Posts Localism Sponsor Hit Router Attended Rain Camp Called Shot Master

Joseph--- my buyers want the house. The listing agent is presenting our appraisal to his asset manager, and we're hoping they will agree to a reduced sales price.

Laura --- if the appraisals were at least close enough (they're not), or if the appraisals had some comps in common (they don't), they will be more believable.
10:33am • #3
NOV
21
2008
232,515 Points 1 Featured Post Attended Rain Camp

Interesting situation, hope it works out for your buyers.
8:02pm • #4
Hello Pacita, What I recommend is just have the first appraisal send the comps to he utilized in his appraisal to the new appraisal because that is a huge gap. Good luck and if your Buyers are getting FHA then they are stuck to the appraisal. If the Seller is smart they will sale now. Good luck!!!!
10:12pm • #5
NOV
22
2008
461,861 Points 47 Featured Posts Localism Sponsor Hit Router Attended Rain Camp Called Shot Master

Miguel  and Angelia --- I forwarded our appraisal to the listing agent. We reached a compromise. The REO bank agreed to lower the price to $180K. My buyers are happy to come up with the $5K difference at this reduced price.

Happy ending!
2:28am • #6
1,215,723 Points 44 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

That much of a difference in the appraisals shows too much subjectivity for me. Glad to see that the bank accepted the more recent one for your buyers.
2:34am • #7
461,861 Points 47 Featured Posts Localism Sponsor Hit Router Attended Rain Camp Called Shot Master

John --- I was happy about it, too. Guess that after the first buyer backed out, they were happy to see that we were still interested. How could they lose?
2:35am • #8
JAN
12
2009

I love that video - speaks volume!  I am going through the same issues as you except they are the first buyers in contract on an REO property.  The appraisal came down as a big surprise to everyone at exactly $35k below the purchase price.  I am attempting to negotiate with the listing agent to present the offer at the appraised value but going nowhere.  Any suggestions since you have experienced this?
9:58pm • #9
461,861 Points 47 Featured Posts Localism Sponsor Hit Router Attended Rain Camp Called Shot Master

Tina --- the listing agent must present your documentation to the REO bank. Because prices are changing so rapidly, perhaps you should try what I did:

  1. Submit a copy of the appraisal to the listing agent to share with the asset manager
  2. Submit other documentation to validate the appraisal (i.e., give more comps along with the comps used for the appraisal). Also provide information on competing properties and what they're listed at.
  3. If the bank your buyers are using is a reputable and strong bank, let the listing agent know that whether your buyer or another buyer gets the property, this appraisal is a good gauge of how much the bank may be willing to lend.
  4. If your buyer walks, the REO bank asset manager and the listing agent will have to start from scratch marketing the property all over again. And as time goes by, the possibility that the prices will come down is very real. Wouldn't they prefer to work with your buyer? A bird in hand is worth two in the bush.

Essentially --- what I told the listing manager is that we got this far. My buyers are serious buyers who spent the money for the appraisal and inspections. But the bank will not lend the money for above the appraisal (any asset manager ought to know that!).

If that doesn't work, then it's up to the buyer to either cut his losses and move on, or come up with the difference. I'd probably recommend moving on....

Good luck!
11:07pm • #10
JAN
14
2009
 Pacita, I appreciate your suggestions. At this point buyers decided to walk because the listing agent refuses to submit the information to the asset manager citing there was not enough documentation to support the appraisal.
4:48pm • #11
461,861 Points 47 Featured Posts Localism Sponsor Hit Router Attended Rain Camp Called Shot Master
Tina How foolish of the other agent! Here's what I tell my buyers if they are disappointed at not getting a particular house: it's because the right house is still waiting for you. My current escrow is for one such couple disappointed at losing out on a foreclosure...but when I showed them my newest listing, they loved it, immediately wrote an offer, and we're in contract. They are so much happier with this purchase. And my bonus? I double ended it!
5:03pm • #12
Yes, he is very foolish indeed. Well I guess he prefers to market the property longer. I talked to my clients, they are very disappointed but I told them another house which is just for them is still waiting. And who knows, maybe once the listing agent realizes his error and sees his listing sitting there for a while, going through price drop after price drop, we can always come back with another offer just to remind of us.
8:44pm • #13
MAR
18
2009
173,821 Points Outside Blog Attended Rain Camp

That difference in appraised value suggests one of the appraisers may have trouble interpreting the data due to inexperience. Two appraisers using the same data sources could vary by 5% using standard appraisal practice but when they vary more than that it is typically an issue with experience or the lack thereof.
8:41am • #14

This blog does not allow anonymous comments
 

Find CA real estate agents and Oakland real estate on ActiveRain.