Dena Lock, Both Buyer and Seller in Highland Village, TX

We are selling our house. We had an on site appraisal done that was paid for by the buyer and done by the

Asked by Dena Lock, Highland Village, TX Fri May 2, 2008

lender. A second appraisal was done by the underwriting agency that the lender sold the loan to. The initial walk-through appraisal was $5K less than our already agreed upon asking price. The underwriting agencies appraisal was 10K less than that. This person was an apprentice and no one came through the property. We have completely upgraded everything in our home. New paint inside/out, brand new energy efficient windows, new flooring almost throughout, completely gutted and renovated master bath w/travertine and tile, completely gutted and remodeled kitchen with granite. Letters were written by 2 real estate agents who came through and valued our home to this appraisor as well as by the person that did the proper appraisal telling them their appraisal was improper and incomplete and none of this was taken into consideration. We have now lost $15K on our home. This was our first home and we feel completely screwed.

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Answers

15
One might argue that you never had the 15k, just an inflated sense of its worth.

There is no spoon.
3 votes Thank Flag Link Fri May 2, 2008
Bruce,

The lender will not allow the homeowner to use their own appraiser for the loan, as per your #5. Why would she need to talk to the appraiser? An appraiser can not and should not ever talk to the homeowner regarding value (if that's what you meant). It is against USPAP regulations and they could lose their license. The best bet is for the homeowner to type up a list of the improvements and then give those to the appraiser. At least he/she can then have a list in front of them when making adjustments. (Hopefully, this is what you meant. :) ) But never talk to the appraiser about value. Big no-no!!
3 votes Thank Flag Link Fri May 2, 2008
I can not understand how the lender sold the loan before you closed and they owned the loan , I question the source of the money. This is beginning to sound like a discount buyer and lender.

First I can see you had no representation and felt you knew how to control every thing. Now you ask the very people you did not think could help you to get you out of a mess. And may I say some would get you in deeper. You do not talk to the appraisers or the lenders of your buyers - who are you the mortgage broker?

You spent the money that seller should spend in order to have a prompt sell of his/her property.
YOU CLEANED UP. The square footage was the same, the neighborhood was the same.
You really had no change other than visual, unless things were deterioted to the point that an appraiser
would mark off on the property.
If you feel your home is more attractive than the others on the block that is great, and if it is it will sell faster and prehaps for a little more. BUT you do not try to make your home look like the homes in the neighborhood down the road because their homes sell for 25% mors and expect that return. An appraiser must use comps from the same subdivision if they exist.

Please contact a professional Realtor personally, but we are not allowed to answer legal questions, you need an Attorney for your recourse, you need a Realtor to sell your home.

As they say you have a Mell of whatever, Good Luck

Margaret
1 vote Thank Flag Link Fri May 9, 2008
Dena, I can surely understand how you feel, and if you have not closed yet, can you just not renegotiate the P.A., and ultimately lose the Buyer? You could do that and as you stated "not lose the 15k"? Though, likely if you cancel this deal, relist the home, and get another Buyer, the same thing apprasial results are likely to happen again. I'd take the deal, be happy it's sold, and move on. Zak below, does have a good point......really it's 15k you never had. But, that said, I know you were expecting it.

Thanks, Todd Norsted
Web Reference: http://www.toddnorsted.com
1 vote Thank Flag Link Mon May 5, 2008
I sympathize with you completely, but I'm puzzled by the $15K figure, when you say that the worst appraisal came in $10K under your contract price. Are you saying that you put $25K into the improvements?

OK, here's another option--can you renegotiate the contract, or have the buyers gone bye-bye? If the buyer wants the home, and you conceded some buyer closing costs that the buyer is able to bear, you may be able to at least mitigate your losses by lowering the cost and eliminating the concessions. You should be able to do this by lowering the price by only $5K.
1 vote Thank Flag Link Fri May 2, 2008
In today's market, lenders are skitish and appraisers are being extra careful (i.e. conservative) in their valuations. Unfortunately, it seems that the changes you have made to improve your home are not enough to offset price declines in the market overall according to the appraisers. The one thing you need to remember is that an appraisial is an opinion of value. If your attempts to bring additional information to the attention of the appraiser fell on deaf ears, there is not much you can do about it -- and some times life is not fair. As a general rule, replacing existing functionality in a home with fresh paint, new tile, new windows, etc. will not necessarily give you 100% or better return on your investment. When you make improvements that add square footage or functionality such as finishing a basement, adding a deck or porch, adding a garage -- these are the kinds of things that are more likely to give you a bigger bang for your buck. There are a lot of unhappy sellers in the market today. Take encouragement from the fact that you got an offer. Depending upon the downpayment situation of your buyer and the cash they have available, you may be able to negotiate a lower price for the home or have the buyer pay a higher downpayment to keep your deal alive. Chances are the buyer will want the price reduced the full $15,000, but you may be able to negotiate with them and split the difference in a way that will satisfy the lender, the buyer and yourself. This is a situation where a good agent may very well pay for themselves.
1 vote Thank Flag Link Fri May 2, 2008
a) When a person updates a house outside of minor items, paint, carpet, miscellanous what are there long term goals, many times a person can "sink" allot money into a property w/o any return except for a few $1000 from an appraisal.
b) If the send appraisal was only paid for as a drive by appraisal not a full appraisal can have some reduction in price for they did not preview the property,
c) Did you compare the sq. ft. I was the listing agent on a property, that I sold to my clients a few years earlier, I had the past file, the new buyer appraisal came in 800 sq. ft less than 2 years prior... it caused all kinds of problems I provided proof did a full blown review, and the appraiser REFUSED to return an remeasure the house, the listing agent, myself, brokers made all kinds of attempts, the buyer was going to loss money the bank would not lend the money, there was a significant difference based on sq. ft. we had to cancel the sale of the property with the buyer. AND GUESS WHAT THE NEXT APPRAISAL came in with the correct sq. ft. from 2 years prior, builder plans, tax rolls.

CLOSING:
You need to compare all author statements, your listing agent should be able to detail the reports for you.

Sorry to hear what happened

QUESTION:
Does your house back up to the lake? if so I have a relo client that would love Highland Village however wont' purchase a home unless it lake view. If so contact my office.
Web Reference: http://www.lynn911.com
1 vote Thank Flag Link Fri May 2, 2008
Dena,

Although the second appraisal was performed by an "apprentice", you must understand that the appraisal itself was signed off on by a Certified Residential Appraiser. The CRA had to look over the appraisal and make sure that it was correct before he/she signed off. What you must do is look at the sales comps that the appraiser used and determine if they are comparable to your property. Do they have all the same amenities that you say that your home has. The appraiser must use sales comps that he/she feels are comparable to your property or make adjustments for those things that are different. If you don't think that they are then you can supply comps that you feel are more comparable for review and re-consideration. However, please be aware that they must have sold within the last 3 months (you can go up to a sales date of a year, but if there is a newer sale it has to be taken into consideration first), it has to be within 20% of your square footage (less the garage), you should have comps that are about the same size, one a little smaller, and one a little bigger (if possible), and all sales prices have to be within a 20% range of each other. If you live in a suburban area, they must come from within a one mile radius. If that isn't possible then as close as possible. However, please remember that the appraiser can not overlook comps that are there because you need to make a specified value. That is against USPAP regulations and they can lose their license. So there are lots of rules and regulations that an appraiser must follow to determine your value. Was there a lot of time between the first and second appraisal? There could have been more sales in between the two that the second appraiser needed to use. Just a thought. Hope that this helps. My husband is a Certified Residential Appraiser, so I have an inside look at what they go through. If you have any questions, feel free to write me at jackie@texasindependentrealty.com or post here on Trulia, and I will respond as well. Thanks so much and good luck!!
1 vote Thank Flag Link Fri May 2, 2008
You don't have to sell the house. You contracted to sell your home to the buyer for "X" and agreed to certain conditions( repairs, survey, closing date, etc.). You do not have to sell it for less. Now if you have to move right now, you might be stuck and your options limited. The buyer can pay more for it than its appraised value. Read the contract. But the again, he doesn't have to. You can take your chances and put it back on the market, realizing that the same thing might happen again. Appraisals are like judging beauty contests; one appraiser might find the value in your home, and another might not. I would talk to your realtor, or was this a "for sale by owner"?
1 vote Thank Flag Link Fri May 2, 2008
If there are current comps in the area that your Realtor can print off and show that the value is what you say it is then you should have a good argument. However it doesn't sound like you are using a Realtor to list. If you are FSBO there is a possiblity that they took the fact into consideration and subtracted out the 6% that is usually factored in with the other homes that sold via Realtor. I know that sounds like you are getting punished however you are listing your home based on recent solds and more than likely they were listed. NAR has a study that shows that people actually will make more money off their homes by listing with an agent. I wonder if it is possible that when appraisers go out that they might take a FSBO into consideration and knock some value to the homeowner because commission isn't being paid. Just a thought. I'm a Realtor and I've always been irritated when FSBO's won't pay Realtor fees but they price their homes at the same price as the listed homes on the street.... If you are listed then your Realtor and the buyers Realtor should be able to argue if the value is truly there. With todays market I have seen properties drop 6% over the last 12 months due to foreclosures. I had one subdivision that was dropping 10k a month because of the foreclosed properties!
0 votes Thank Flag Link Thu May 8, 2008
Dena,

One thing that I'm not clear about, is why there were 2 appraisals done to start with. Typically, the bank orders one and that is it. Was it because of the low value on the first one? The second question is in regards to second appraisal that came in even lower. You stated that no one came through the property, yet it was an apprentice. So was it a desktop appraisal, and who actually signed off on the appraisal? Was it just the apprentice, because if he was actually an apprentice, then there must be another signature from the Certified Residential Appraiser that sponsors him. If there is not a second signature, then I would contest the second appraisal (if he is truly an apprentice.) Good luck!
0 votes Thank Flag Link Fri May 2, 2008
Was your home listed by a Realtor for sale?
Was the Realtor present when the appraisal was done?
Did you Realtor offer additional comparable sales?
You have some great advice so far. If the answer is "no" to any of these questions above, you might want to see if you can use them to remedy your situation Remember that how much your invest in improvements does not translate into dollar for dollar value.
0 votes Thank Flag Link Fri May 2, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Your realtor should walk you through this process step by step....but here are my suggestions.

#1. Ask appraiser #2 to come back and reappraise with a walk-thru and with the boss.
#2. What did they use for comps. They are on the appraisal. Can you do your own drive by and see
if they are comparable homes? If not maybe you or your realtor could suggest homes you/they think are appropriate comparables.
#3. Can the buyer still buy the house even with the lower appraisal? Sometimes they can fund the difference in the loan limits or are they trying to push the price down to match the appraisal?
#4. If they are doing one loan can you take a second for the difference if that is needed?
#5. You might pay for your own appraisal using an appraiser from the bank approved list and see what they say. Be sure to speak to the appraiser when they visit.
There are lots of different options. Now this is probably what you don't want to hear, but is it possible you over improved the property? I'm think of a situation in Grapevine right now where every house in the neighborhood was built in the 50s and is in the $100,000 price range. An investor came in a purchased one of these and decked it out similar to what you describe. He paid $70, probably put $30 into it and now wants $160k. I think in this instance it won't appraise anywhere close to $160k...even if you could find someone willing to pay it. I'm not saying that is your situation, but is it possible?
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Fri May 2, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
I would encourage you to see if buyers lender could talk with underwriting to see if they could get this second opinion waived as property was not properly inspected. I just recently worked a transaction with FHA loan like this where they had to have second opinion-appraisal for my buyer which delayed our closing a couple of days. So I can feel your frustration.
0 votes Thank Flag Link Fri May 2, 2008
I agree with Scott, COMPLETELY! One thing, however, was the loan an FHA loan? IF you do not take this offer and put it back on the market and the next buyer that comes along decides to go with an FHA loan, THAT last appraisal can be "attached" to your property for SIX MONTHS! That is something else to take into consideration.
As Scott said, if you have to sell right now, you may have to cut your losses. IF NOT, let the buyer know that YOU have already agreed upon the price. It is up to them to get the money in order to buy the house at that price.
Good Luck.
0 votes Thank Flag Link Fri May 2, 2008
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