Unfortunately, the house is located in a new development; the homes are only 5 years old, and there have been several foreclosures in recent history. The seller doesn't have a lot of equity in the home and was barely going to break even on the sale. It is a beautiful home and only minor things came up on the inspection, so hopefully she can find a buyer that is willing to put down a larger down payment in order for the financing to go through.
I have learned an expensive lesson from this....next house I fall in love with, I will pull the comps before I make an offer!
Why not ask the seller if they would be willing to sell the property for the appraised value. It may not be fun for them but in the end it may be better than losing the sale and having to find someone else to buy the house.
Coldwell Banker Burnet
licensed MN Broker
"Typically, the Sales Comparison Approach is the most applicable approach to estimate the market value of a REO property. Appraisers may utilize sales comparables from other REO transactions only when such sales are deemed to be the best available for the market area and they meet all of the following criteria:
â€¢ located in the subject neighborhood or reasonable proximity
â€¢ comparable property subject to reasonable adjustment
â€¢ sold with a willing buyer and seller
â€¢ exposed to the market for a reasonable period
Appraisers are reminded that an explanation, as well as support, must be provided for any adjustments to the sales price of comparable sales that exceed the guidelines set forth in Revised Appendix D: Appraisal Protocol, pages D-31, D-68, D-98 and D-127, attachment to Mortgagee Letter 2005-48.
Inclusion of vacancy rates, rates of foreclosure and a discussion of foreclosure sales in the subjectâ€™s market area may be used as additional support for reliance on sales of other REO transactions.
Do not use distressed sales such as Sheriff Sales. These sales do not involve a willing seller nor are they exposed to the market under normal conditions. The resulting value indication derived from the use of such sales is not consistent with the definition of market value."
FHA's Mortgagee Letter 05-48 is in the web reference. These should be the exact guidelines you're looking for.
The Appraiser is more constricted by the DISTANCE from the house, than he is by the details of the Comps.
There are places in the Appraisal for the Appraiser to allow for the CONDITIONS/CONSIDERATIONS OF SALE>
Besides, the Appraiser may have just saved your bacon.
Good luck and may God bless