I need to vent. I sold a home in record 30 days on the market for a record price over a million. In a neighborhood where the average selling price is 400's.
Great, the sellers are happy, but I am thinking about the appraisal issues that will come up, which they did. The best appraisal the buyers could get was in the high nines.
The seller dropped the price to the appraised value. Then the lender had a "field review" and determined that the home was only worth 800k. The mortgage broker shopped the deal to a few other banks and the highest that any underwriter would value the property was for 875,000.
Yes, our market is in freefall, but isn't a home worth what a buyer is willing to pay? I had a buyer willing to pay 1.015, then 975, now buyers remorse has set in and the buyer wants an even better deal.
Prices in Bradenton, FL have tumbled, from my perspective the prices have dropped by 30% in the past 8 months. This is based on differences between homes sold this spring to this fall. Amazing.
I assume that I am not the only one dealing with underwriter that question appraisals, but why do they require an appraisal in the first place if they are not going to honor it's value? I am not sure what methods the underwriters use but when there is a unique home, with no easy comps, they have no problem to tell us their value opinion, which then can make a buyer get into serious remorse, thinking they are paying too much.
Any tips out there. A note, I was the listing agent, not the selling agent. I would have recommended a local lender I know that would have eliminated a lot of my challenges.
Lowes Shopping Plaza 7347 52nd Place east Bradenton, FL 34203
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The underwritter does a mapquest. Then they cross reference the properties. I have heard now they are getting bpo's done privately(that is just a rumor) so if you have someone doing a field review or slient bpo then lets say that person really is only doing it for the few extra bucks. Who knows what they are putting on these thing. Lets say the underwritter pulls comps. from the local board in that subdivision and it only says the property is worth a lessor amount can you really disagree with them based on all the SHADY crap they have seen in the past.
I think the bank is looking at todays appraised value, and then looking at the recent 30% drop in value and then factoring in another drop in value for the future. They need to be assured that if the market continues to fall, and if your clients default they can still recover their money at a foreclosure sale. The solution here is what was done so often in the 1980's when interest rates were over 15%....Seller financing. (Land installment contracts, wrap arounds, seller held seconds, etc) We used to call it creative financing...I knew one agent that routinely took his commission in the form of a note, to make a deal go. The other option is of course cash. The buyer can make up the difference between the sales price and the mortgage with cash. We used to call these down payments
I had a similar situation in CT. The client said his home was worth 750 000. He appliedfor a HELOC, FICO 657 and LTV of 80. Joe and Molly like you my appraisal came in low. How low you ask ? 650 000 . No easy comps and I was working on this loan for a few months. The client was slow in getting me his info. He took 1.5 months to get me his documents to go full doc. I got him approved a week after and he thought 7 % was to high. I did a low cost closing so his appraisal cost him $50., the title was around 180 and attorney fees were 350 and I charged him 1000 flat fee.
He was applying for 150 000 then said no 100 000 then lets do 80 000. he couldn t undersatnd why his rate went up with less $ being borrowed. He needed to pay off his car and Amex to be approved which he didn t like.
He calls me today and says he can get 6 % from his bank, I say ok go get it I'll be here when you come back. He was like what do you mean, LOL I said you won't get 6 % or close in 10 days and banks are more conservative on appraisals, and I can close tomorrow, not 10 days. I plan on calling him on tues next week to tell him we can close on Thursday for him.
Buyers remorse gas alwats been bad, but know it looks like the lenders are making it much worse.
Cash down? who does that. lol
I just got a call today to do a reverse BPO on a property. I had done a BPO a few weeks ago based on current market value. They sent me a copy of the appraisal from 2 years ago to compare. Interestingly enough I came in $6000 less than the value from 2 years ago. Not that far off but I noticed that the appraiser had not factored in that all 3 of the comps had been completely renovated and the subject property was just in average condition. The property is currently on the market for 100K less than the purchase price. Who knows what is going on but I think we will see more 2nd opinions as the market continues to try and regain footing.