Are you experiencing more problems with the credit quality of the buyer or low appraisals?

Asked by Dream Team, Avon Lake, OH Thu Mar 3, 2011

We've all had appraisal issues, but is that the leading reason a deal falls through. Or is it that the buyer just can't get financed?

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, ,
Thu Mar 3, 2011
Hey Dream Team,

It's an equal mix all day long. There is no doubt that the secondary market has tightened and they will only purchase MBS's bundled with higher credit score borrowers. That though should be the least of your worries. If I was a real estate agent, I wouldn't even waste my time to look up properties, drive them around, etc with a potential client until I had a pre-approval letter in my hand knowing that a loan officer did their due diligence to collect income and asset documents as well as a full cursory review of the credit report.

Like Rudy said, you are going to have good appraisers and you are going to have bad appraisers, regardless of how much the government steps in. But with that said, I read the circumstance of Mr. Enlow's where a listing agent is listing a home for $159k when comps support $125-$130...there’s not problem with appraised values there, there is a problem with an agent listing a property for more than it's worth. If your market can support cash buyers for that price then you are good to go, but if you expect to get an offer with financing involved...good luck with that.

No matter what though, good market or bad market, there are always going to be buyers and there will always be sellers…so in todays market instead of getting 5 leads and closing 3, you just have to get 10 leads to close 1 or 2. At the end of the day it just means you have to work smarter and harder to make a living.

We are a national direct lender and I am I licensed senior loan officer in your wonderful state of OH up there. If you ever have financing issues, questions, or concerns…feel free to call me. 7 out of 10 times we can help a potential client with less than perfect credit scores increase them in no time at all to get them where they need to be. Best of all, we close our loans in as little as 10 days with an average turn time of 19 days. Faster closings mean faster money and free you to find that next great client.

Joshua A. Lerette
Senior Loan Officer
Residential Finance Corporation
800.930.7334 Ext. 1108 – Toll Free
813.402.4637 – Direct Line
727.488.7355 – Cell
888.692.5967 – Fax
1 vote
Lenderbradfo…, , Cleveland, OH
Thu Mar 3, 2011
Dream Team, I live within a few miles of Avon Lake and work primarily the west side of the Cleveland Area. The largest issue I see is finding Income or Credit Qualified buyers. I know Credit Score restrictions exclude some buyers from buying. I have seen what I believe are good buyers that have limited credit profiles and for this reason lower Credit Scores. When it comes to appraisals, I have not had an issue in quite a while. Maybe that is because of the Realtors that represent the buyers. Just recently one of my Realtors called me for my opinion on an offer they were writing. The property was priced at 159,900 and the Comparables the found using a CMA only supported at 125-130,000 offer. The realtor had called the Lister of the property asking them to provide a CMA or Comps to support the 159,900 List price. The lister told the buyers Agent that they were not there to do the Buyers Agent's Job. With the information I recieved if this home is sold anywhere near the list price an appraisal issue would be likely. If that occurs, is that the fault of the Appraiser? Let me also because I know Avon Lake, there is a large span on the ages of homes. Comparing a 1950's home agains one built 10-15yers ago is not something acceptable to appraisers or underwriters. Listing agents have to do what their sellers tell them to do. Sometimes this can result in over priced homes and potential appraisal issues.

Again as I say, I am local to Avon Lake. If you wish to share any particular information on an appraisal or buyer I am jsut a phone call awey. I would enjoy th eopportunity to talke with you. My phone number is 216.324.8113
1 vote
, ,
Thu Mar 3, 2011
Even when the market was good, you still had crappy appraisals and appraisers. My issue is when underwriting, despite the new HVCC and lender guidelines that suppose to nixs this, still take upon themselves to be arm-chair appraisers! In my expereince, that's where the issues still lies.

With regards to buyers failing, if they were actually fully and competently preapproved (i.e. experienced review of their credit score, history, tax returns, employment, income, and assets), and not just prequalified (i.e. pulling of credit report and verbal on income, employment, and assets,) you would nix most of that maddness before the offer was ever submitted.
0 votes
Dp2, , Virginia
Thu Mar 3, 2011
I don't understand why so many agents have an issue with appraisals that come in below the list price. A motivated seller would be willing to do whatever it takes (within reason)--whether it's to reduce the price or pay for the repairs--to get that deal done.

The financing also doesn't have to be an issue provided the sellers are willing to be more flexible and creative.
0 votes
Josh Giordani, Agent, Carlsbad, CA
Thu Mar 3, 2011
I have had problems with only my appraisals... They are getting very strict..
0 votes
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