Home Buying in 80027>Question Details

Johnquest, Home Buyer in 80027

seller wants no appraisal done but my bank requires an appraisal?

Asked by Johnquest, 80027 Fri May 8, 2009

How do my realtor and I accomodate this seller? She doesn't want an appraisal done. We're putting 22% down and our loan will be for the balance of of our offer. Our offer is at 404,000. Our bank requires an appraisal to get our loan.

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17
John-
Appraisers do not go into an inspection with the desire to mess up a sale or invalidate your financing approval. They simply go in independently and try to determine if the home is worth what you are paying for it. Sometimes, appraisers simply cannot justify a purchase value and have to input the fair market value. Now keep inmind that nothing prevents you from paying over an appraised value - that choice is up to you. However, your loan will be based on the loan-to-value of the appraised value - not the purchase price. That could cause you to need mortgage insurance even though you would be putting over 20% down on the deal.

However, I would suggest that you don't just go ahead and order your own appraisal. The banks may not accept it. You need a contract, loan approval and payment through the bank to have that appraisal honored.

Yes, just get the loan approved, get a contract and split the cost. The seller has nothing to lose and everything to gain if the sale goes through.

Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com
2 votes Thank Flag Link Fri May 8, 2009
We build in a contingency on all offers that in the event the appraisal does not reach contract value, Seller is to reduce the price OR (and this might more apply to you) refund to the buyer all costs associated with inspections, the appraisal, and any other real costs, not to exceed $1,000 (which should be a sufficient amount). That way, the buyer is not on the financial hook.

Hope that helps!

Chris & Erin Ratay
http://www.RatayRealty.com
Work. Play. Live.
1 vote Thank Flag Link Sun Feb 13, 2011
I used to work for a Title and Escrow company in a different state. Suggestions: 1) Have your realtor contact First American Title to get a (Free) Property Profile. Their (FAM) property profiles have plenty of details of sales in your area. It is free to licensed Realtors and Lenders. (2) Also, you may want your RE agent to contact B of A Home Loans for they have a cool and FREE Value Finder Land Safe Report which gives an estimated appraised value of your home and the homes in your neighborhood. Best of Luck!
1 vote Thank Flag Link Thu May 6, 2010
My Goodness, why would you even consider buying the house without an appraisal? The appraisal is to protect you, if the seller doesn't want one done, there must be a good reason she doesn't want it done...like it's not really worth what she's asking for it. How far along are you in this transaction? Has she already signed a Colorado contract to buy and sell with you? If you have, reread the section on Appraisal Provisions. As always, you may want to contact a real estate attorney for advice.

Sandy Kinslow
1 vote Thank Flag Link Fri May 8, 2009
Hi John,
If you already have a signed "Contract To Buy & Sell Real Estate" with the seller, your broker would have more than likely made contract contingent upon an acceptable property appraisal. If "Appraisal Deadline" and "Appraisal Objection Deadline" dates are filled in on the date table of the contract, then the seller has already agreed to let you do one, and can't deny it.
1 vote Thank Flag Link Fri May 8, 2009
Hello John-
In this market it is very tough to avoid having an appraisal done. You obviously are putting a good amount of money down but the loan product itself might simply require one.

If you are going Conventional in your financing there is an option for what is called an "Appraisal Waiver." These historically have been allowed for high credit borrowers with at least 20% down. However, with the market being what it is, the lender could need an appraisal to verify that the loan does not require Mortgage Insurance. An FHA loan would always require an appraisal.

I am going to check with our in-house Underwriter to see if the system will still generate an appraisal waiver. However, I do find it quite odd that it is the seller wishing to avoid an appraisal. These typically are requested by a buyer to avoid an extra $400 fee.

I will see what I can find out.
Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com
1 vote Thank Flag Link Fri May 8, 2009
It is nice when questioners return to let us know how things turned out. Did you proceed without an appraisal. Does it seem that everything turned out OK?
0 votes Thank Flag Link Fri May 31, 2013
John the seller is not living in reality if they think you can get a mortgage without an appraisal. You will need the listing agent to make the seller understand the job of the appraiser and teh reason for it. Without doing an appraisal you only have cash buyers left and they wont pay nearly as much as a retail buyer getting a mortgage. When the sellers realizes that, they should change their mind
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Thu Sep 8, 2011
Hi Johnquest:

This is an older question but I was wondering how things turned out for you. Did you ever learn why the owner did not want an appraisal? Did you purchase with or without one? Generally I agree with the answers below. It is hard (probably near impossible) to get a mortgage without an appraisal. And the appraisal from the bank should give you a lot of peace-of-mind that you are not overpaying for the house. I can't think of any reason why you would not want one and the seller should be accommodating because it helps you get your loan which, in turn, helps the owner sell the property.

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
Days: 303.981.1617
Evenings: 303.473.1926
ron@rovtar.com
http://www.rovtar.com
0 votes Thank Flag Link Thu Sep 8, 2011
There is no good reason to refuse an appraisal unless you are trying to hide something. I have taken the course and think that every home should be appraised.
0 votes Thank Flag Link Tue Jul 19, 2011
Of course. The Seller also does not want you to do an inspection and they want you to pay all cash. The appraisal is to protect the buyers lender against lending more money than the property may be worth at fair market value. So, if the seller thinks their price may be high, they do not want you to do an appraisal. The fact is that no lender will lend money without an appraisal or an independent valuation. They need assurance that they can get their cash back out if you fail to pay. BUT...if the appraisal conditions are a deal breaker for the seller, and you want to try to buy the house anyways, there are other legal andsimple ways outof a contract if you are unhappy with the appraisal. youll hear me say this often but, get a realtor involved.
0 votes Thank Flag Link Tue Jul 19, 2011
Soundsdoubtful the seller would even be willing to pay any part of an appraisal or even to allow it. Even if you did manage to get the seller to agree to get an appraisal done, whether it is done before going under contract or not, the seller still wouldn't have to sell the house if the appraisal came in below the amount she is asking. Sound like this could end up costing you time and money and not getting anywhere.
0 votes Thank Flag Link Fri May 8, 2009
John,

With the additional information you provided, it only further amplifies the need for an appraisal AND a home inspection. Do you know if the proper permits were pulled for all the phases of the remodel? You'll want to call the city and make sure the permits and inspections are on file. An home inspection will help determine if the proper electrical, plumbing, and other building codes were followed throughout the remodel.

Keep in mind that a good appraiser will take into consideration the age of the home, all of the upgrades, remodels, etc. and will value the home based on it's current condition. The seller needs to realize the money invested in the remodel, may not be recaptured completely when the home is sold. Depending upon the location, comparative homes in the market and finish levels, it is not only quite likely she will not realize the full dollar-for-dollar return of her remodel investment, it may in fact be probable.

If you go into a property paying more for it than it's MARKET VALUE, consider what may occur when you are ready to sell the property. It's a risk you should not consider lightly.

I'm not sure it is necessary to have the appraisal completed prior to making an offer. A buy-sell agreement properly completed with a contingency for the appraisal should be adequate to protect you and allow you to walk away from the deal if the home doesn't appraise for the sales price. At that time, you can resend your offer and make a new offer should you decide to do so.
Web Reference: http://www.vickieslade.com
0 votes Thank Flag Link Fri May 8, 2009
This is what we're considering - running away from it. If there is a way to have an appraisal done by the bank before there is a contract that would work but I don't know if that's possible. Ask the seller to split the costs of that appraisal. The seller is difficult to say the least (wants to sell now, wants no appraisal, wants a cash buyer, etc.) I mean our offer is accurate. We feel the house will appraise at or near the purchase price, but it would be difficult for someone to appraise the house if all they do is compare it to houses of similar size or whatever. There's no comparison in terms of the home's finish and quality. Could we recommend an appraisal be done before our offer somehow?
0 votes Thank Flag Link Fri May 8, 2009
John,

I recommend ALL of my buyers get an appraisal. Even when not required by a bank (CASH sale), I still recommend they get an appraisal; it's for their own protection. Not only do I recommend an appraisal, I also recommend a home inspection to ensure that any potential problems are uncovered prior to close. Purchasing a home is a huge step and I want to make sure my buyers are as fully informed as possible before closing on a transaction.

The seller basically, doesn't have any right to disallow an appraisal by the buyer. You may not want to offend the seller, but........ just considering the fact that the seller has requested an appraisal NOT be done should be a MAJOR RED FLAG!

Under these circumstances, I would not only highly recommend you get an appraisal, but I would insist upon it! In fact, I would recommend that you get TWO appraisals and insist you also get a home inspection.

If this presents a problem for the seller, I would encourage you to walk (RUN) away from the deal.
Web Reference: http://www.vickieslade.com
0 votes Thank Flag Link Fri May 8, 2009
The house is a small house, 1800 sq feet, but it has been completely remodeled with high end finishes (granite counters, crown molding, recessed lighting throughout, landscaped (yard leveled with topsoil, landscape lighting, surround sound, 3 season sun porch, etc, the whole nine yards.) The seller is afraid the appraisal won't do her remodeling justice. Comparable houses in the same size are at 325,00-350,00 for the most part but without these types of finishes. We're not under contract. She rejected our offer because we're not willing to waive the appraisal. We'd like to go back to her with some sort of alternative offer. Maybe an appraisal done very early in the process. Change our offer and put 20% but save our other 2% for a cushion of about 8100 dollars.
0 votes Thank Flag Link Fri May 8, 2009
Okay, what I found out was that the Appraisal Waiver will be a condition that comes back in your loan approval. It is still possible to be system generated, but less likely in a market that is deemed to be "declining." Also, it is possible that an underwriter will overrule the condition and require the appraisal waiver anyway - it simply is up to them.

Even if you got the waiver and were okay accepting it, you would still need to speak to the seller that your lender "may" still require one.

Your seller simply may not have a choice in the matter whether a buyer gets an appraisal or not - unless they do not want to sell their home......

Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com
0 votes Thank Flag Link Fri May 8, 2009
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