The Appraisal Came in at WHAT??? A Cautionary Tale for Second-Home Buyers

By
Real Estate Agent with Century 21 In the Mountains

I recently negotiated a contract for a beautiful home justStress outside of Blue Ridge. The home sits astride a small pristine lake surrounded by mountains and shared with only three other homes. Not only is the setting gorgeous, the house itself -- a luxurious 6-bedroom, 4.5-bath home -- is well-appointed and has been meticulously maintained.

Our buyers are a wonderful couple from Atlanta who are buying the home initially as a second-home, with plans to eventually retire here. They are positively giddy about the house -- they love everything about it and can't wait to call it their own.

The entire contract process has been going along swimmingly. The price negotiations went well, we were able to arrive at a fair price. The inspection turned up only minor issues that the sellers have been more than willing to address. We know our buyers have sterling credit and they are putting down 50 percent, so we figured we had nothing to worry about with the financing. Price: check. Inspection: check. Financing: check. Slam dunk!

Our buyers have banked at a neighborhood bank for years, so naturally, they felt most comfortable getting the loan through the folks they have a relationship with. Makes sense, right? Only one very big problem -- the in-house lender has only Atlanta-based appraisers on their vendor list.

So an Atlanta appraiser was sent to value a home completely outside of his market area, and the two markets couldn't be more different -- rural vs. urban, second-home vs. first-home, for starters. He made adjustments for things that don't typically command a premium in second homes, and didn't make adjustments for things that do (like water frontage...hello???). As a result, his appraisal -- while perfectly suited for Atlanta -- was pretty far off the mark for our area; it came in $50,000 low.

The bank approved the loan despite the appraisal -- in part, I'm sure because of the large down payment -- but I have appealed the appraisal anyway. I am appealing in part because I want to make sure my folks are getting a true snapshot of value. The other part, I admit, is because I don't want them to think I sold them short.

The moral of the story? When you are buying a second-home make sure your lender will use a local appraiser who is familiar with that market. Better yet, work with a local lender that uses local appraisers. That lessens the chances for nasty surprises. 

Here is an article on the subject that appeared in today's Atlanta Journal-Constitution.





 


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GEORGIA REAL ESTATE INVESTORS
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Diary of a Realtor
Tags:
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kim southern
century 21 professional realty group
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Rainmaker
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Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Isn't it great when an appraiser is so far off.  They are at some instances taking too long but then we have deal breakers.

Oct 21, 2009 01:17 AM #1
Rainmaker
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Kim Southern- "Sold" with Southern Hospitality
Century 21 In the Mountains - Ellijay, GA
Greetings from the North Georgia Mountains!

Tim: As if we don't have enough to worry about! Guess that's why we get paid the big bucks! ...sigh...

Thanks for stopping by!

Oct 21, 2009 01:24 AM #2
Ambassador
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Craig Rutman
Helping people in transition - Cary, NC
Raleigh, Cary, Apex area Realtor

This whole HVCC thing, while good intentioned, is just a mess.

Good for you for appealing that appraisal.

I hope it all works out for you and your buyers.

Oct 21, 2009 01:24 AM #3
Rainmaker
116,746
Kim Southern- "Sold" with Southern Hospitality
Century 21 In the Mountains - Ellijay, GA
Greetings from the North Georgia Mountains!

Craig: No, no...this had nothing to do with the HVAC! (LOL) Yes, you are right, it is well-intentioned but like so much these days, the cure can be worse than the illness.

Thanks for stopping by! 

Oct 21, 2009 01:26 AM #4
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Rainmaker
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Kim Southern- "Sold" with Southern Hospitality

Greetings from the North Georgia Mountains!
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