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Almost a done deal- Dont count your ducks until they hatch!

By
Mortgage and Lending with Colonial Bank

I can't remember the last time I had an appraisal issue on a purchase. Yes, I have had a few refinances take a hit on the value but not once on a purchase. So they say there is a first time for everything and it just happened to me.

My client was willing to do just about anything to get the perfect buy, it is a buyer's market anyways right?? With so much inventory out there and prices below market value banks are ready to lend money to good, low risk clients. My guy has 800 credit scores with verifiable income and assets, great job history, etc etc etc....So, i got him approved for 100% financing which today is like getting gas under $3 a gallon. Everything was going great until the appraisal came in.....

 Contract is "as is", appraisal is "as is", appraiser ruined my deal and basically described every single detail that was unfinished. The home was being remodeled and seller had to leave on a job transfer to Wisconsin. The home had a new kitchen, new floors, new bathroom(s) etc. Here is the hold up. The master bathroom was unfinished but let me explain. The dirt rock is installed, plumbing is done only thing remaining to be completed is shower pan, tile, and fixtures......Besides this, 2 cabinets left un-hung and tile wasn't grouted.....Oh did I mention the value "as is" was $30K over the purchase price!

The home is a 3 bedroom 2 bathroom and already has 1 perfectly workable bathroom. The buyer intends to finish the home as to his own liking after he gets in the home instead of having to see something he doesn't like and has to rip it out and install a new one. This being appraiser marks the home unlivable with structural risk! Are you serious!!??

Later, they had the nerve to add that base boards and paint had to be applied in order for the home to be deemed livable. You can imagine how the buyers felt after I had to tell them this.

I can remember doing way worse types of deals before with Stated Income Stated Assets at 100% with only half the home being completed. I really cannot believe that this happend and that the appraiser wasn't willing to work with the parties to close a solid deal. The client was fully approved and getting a great deal on this home and if needed he was willing to put 5% down and pay the closing costs, seller was only walking away with $5k.

If anyone has some opinions on this please let me know. It seems with all the houses on the market and a good number being distressed i think we all need to work together to stablaize our market.

Comments (6)

1~Judi Barrett
Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

So how's your relationship with this appraiser now?

Jan 06, 2008 11:13 AM
Andrew Adams
Salem Five Mortgage Services, LLC - Winchester, MA
The appraisers are being scrutinized, so if by work with you.... you mean ingnore the property condition. I wouldn't.  My career is far more important than 1 loan!
Jan 06, 2008 11:13 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services
These are very conservative times.  It seems that todays' buyers will have the pay the price for those who were not professional.  It is a difficult situation.
Jan 06, 2008 11:22 AM
Luis Garcia
Colonial Bank - Saint Petersburg, FL
St.PetersburgSeminoleClearwaterMortgages

I can't say that they are my best friend. i just have to roll with the punches and ask more quetions for the next property I am going to finance. Its just too bad we did all the work and now the deal is dead!

Jan 06, 2008 11:28 AM
SHAUN WREN
LICENSE IS NOT PLACED - Lakeland, FL

Luis- You have to understand that the Appraiser is supposed to be an unbiased person. They are only giving their professional oppinion of the property. With all of the adjustments that have been made by the investors to limit risk, did you really not see that coming? I have found that if it isn't in the investors guidelines, call the underwriter or at least your lenders help desk. They can tell you if it will work before your Customer pays for the appraisal.

 Now this is how you fix the problem.

You need to have them do a Construction loan. This will get them the property in the condition it is in. They can finish the repairs and then modify it to a regular loan when the repairs have been made. The Buyers will pay 1 set of closing costs and will pay the Bank Interest only payments until the home is completed.

Never give up. There is usually a way to figure it out. But you have to think outside of the Box.

 I hope this helps you save your deal and your Customer.  Good Luck.

Jan 06, 2008 11:34 AM
David Miller
Saint Petersburg, FL
Florida Appraiser & Licensed Real Estate Broker

Luis, I just read your post so your deal may be dead by now. If not or if the situation happens again maybe they could get a second appraisal. I know that banks do this on some properties. Or perhaps have the appraiser provide a cost-to-cure estimate so that the bank has an idea what it would cost to bring the property into acceptable condition in the appraiser's mind. The cost-to-cure amount may be something the buyer and seller can negotiate and still get the deal done.

  Your post mentioned structural risk which sounds like more than an unfinished bathroom. Were there comments in the appraisal report about what was wrong structurally? Structural concerns are a serious issue and would probably require an inspection by a licensed general contractor or structural engineer. If the problem was not structural there should be a way to get the deal done.

  Of course appraisers are supposed to report what they see good and bad and risk losing their license if they overlook needed repairs. Did the appraiser send pictures of the items mentioned?

If you get it in a similar situation in the future you can call or e-mail me for some input if you like.

Feb 03, 2008 03:19 PM