Pdaddy59, Home Buyer in Grand Junction, CO

Are there any options with HUD if when contracted over list to buy a HUD repo the appraisal comes in a little low and no lender will finance now?

Asked by Pdaddy59, Grand Junction, CO Fri Aug 10, 2012

A friend's bid on a HUD repo was accepted over other bidders at almost $5000 over the list price. The appraisal came in approx $2500 under the price. Now no lending program she can find will finance it even if she pays the difference. Is there any option with HUD to show them the appraisal and have them lower the price to make it work? They still get more than they asked for and no other buyers without cash can pay more than the appraised value.

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Answers

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HUD lists all of their properties at a current FHA appraised price. Lenders use that appraisal for their buyers. If the contract price is higher than the current HUD appraisal, the buyer must bring the difference to closing. There is no need for a 2nd appraisal, and it is not required by lenders who understand the HUD process. As a HUD Listing Broker, my office helps hundreds of buyers each year buy HUD homes. HUD is non-negotiable on the sales price once a bid has been accepted. My best advice to you is to work with agents and lenders who understand the HUD process.....it will save a lot of hassles for you during this process.
0 votes Thank Flag Link Sun Nov 25, 2012
I replied in the comment but I'll do it again here... There's nothing that I can think of that'd prevent a borrower from bringing the difference between the contract price and the appraisal to closing to fund on a loan unless the lender in question won't allow this.

Best of luck.
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0 votes Thank Flag Link Tue Sep 11, 2012
They should be able to come to close with the amount over the appraisal. If I can help in anyway please give me a call. Good luck.
0 votes Thank Flag Link Mon Sep 10, 2012
Their agent should be guiding them through this. They can submit a copy of the appraisal and a written request to reduce the price or may have to submit their rejection letter to get their money back if within teh stated time frame.
0 votes Thank Flag Link Fri Aug 10, 2012
Thanks Scott! Her realtor seemed to go immediately for the rejection letter. I thought there must be a possibility to request the reduction but the realtor just said, "No. There isn't any recourse on this contract now." There is still plenty of time too. Do you know for sure that there is a procedure for submitting the request on a HUD deal like this?
Flag Fri Aug 10, 2012
There are three options that will happen at this point :
The buyer can either terminate the contract, pay the difference from the appraised price to to the contract price or the seller can lower the asking price to the appraised price.
0 votes Thank Flag Link Fri Aug 10, 2012
This is a strange situation, you should be able to close if you're wiling to pay the difference between the appraised value and the purchase price. This sounds more like a lender overlay than anything.
Flag Tue Sep 11, 2012
P.S. The lender and the realtor are both working hard on this but both seem to have thrown up their hands without much of an exploration into other options. I emailed HUD's regional office in Denver with this question as well. They may just say, "No! You have no options!" Seems lame to me though.
Flag Fri Aug 10, 2012
Thanks Ronda. I am an inactive broker in GJ and I know the typical options, but the problem is that the lender had her qualified for the $155K contract price through FHA and Rural Devlpmnt. The original list price was $148K. The appraisal came in at $151,500. Both FHA and RD answered today that they will not finance it, even if she pays the difference, which she is prepared to do. Investors were not allowed to bid so owner/occupnts would have to have offered over $151K in cash for HUD to net more than they were asking. If they would drop it a couple grand they could still close on the 20th. It seems like somebody at HUD could understand the senselessness of killing this. Do you know of options with HUD?
Flag Fri Aug 10, 2012
Thanks Ronda. I am an inactive broker in GJ and I know the typical options, but the problem is that the lender had her qualified for the $155K contract price through FHA and Rural Devlpmnt. The original list price was $148K. The appraisal came in at $151,500. Both FHA and RD answered today that they will not finance it, even if she pays the difference, which she is prepared to do. Investors were not allowed to bid so owner/occupnts would have to have offered over $151K in cash for HUD to net more than they were asking. If they would drop it a couple grand they could still close on the 20th. It seems like somebody at HUD could understand the senselessness of killing this. Do you know of options with HUD?
Flag Fri Aug 10, 2012
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