This may not be news for many agents, but something I've observed when buying a new home... In the past, builders have been able to offer special financing or other perks for using their preferred lender or title company.
When a buyer borrows money, the lender requires an appraisal. The appraisal determines the value of that home. It's only fair that they have the opportunity to make sure that their collateral has a value that is at or above the amount they are loaning. Here's the big question:
Should the appraisal be different if you use the builder's lender vs. any other lender?
The answer: Yes. It's unlikely that any 2 appraisals will match identically. However, they shouldn't differ drastically. I have seen homes appraise for tens of thousands below the price the builder agreed to sell the home for when an outside lender ordered the appraisal. It killed the deal. But I'm sure the builder will sell it for the price they wanted to... as long as the next buyer that comes along will use the builder's lender.
MYSTERIOUSLY, this builder is getting away with selling at these prices over and over again when the buyers have used the builder's lender. What I want to know is, are some builders pressuring appraisers into giving fraudulent appraisals by threatening to give the business to appraisers who will make sure the deals will go through?? Has the mortgage world not learned it's lessons??
NEWS FLASH!!! Some of this may change with recent changes. As of mid-January 2009, home builders are no longer allowed to offer incentives to a buyer ONLY if they use their preferred companies. This includes title services as well as mortgage companies.
They are permitted to give incentives, but they CANNOT tie these incentives to using a "preferred" or "affiliate" company. Outside lenders and title companies now have every chance to compete fairly. But, this will still not protect all home buyers who will no doubt go with their builder's verbal recommendations without finding their own neutral lenders.
Have other agents in Galveston County been witnessing this?
Written by Brian Worrell, Realtor in League City, TX
You can visit my personal site at www.BrianWorrell.com
Or my Real Estate Agent Marketing Tools site, www.AgentFarmSite.com
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved