Can a bank demand a SECOND appraisal on a nearly-closed short sale after the fact, with the loan docs signed? THEY chose the original appraiser!

Asked by Kit2010, 95492 Tue Dec 14, 2010

I'm a first time home buyer. I'm half a breath away from walking on this deal except for the prospect of losing $10K invested so far in buying this house. I didn't choose the original appraiser; the bank did. Everything was in order; I had signed all the loan docs. NOW my real estate agent tells me the bank isn't satisfied with the appraisal and wants a second appraisal! This is an additional $500 I will be paying. I DIDN"T CHOOSE THE ORIGINAL APPRAISER, THE BANK DID.

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6
Michael Young, Agent, San Francisco, CA
Tue Dec 14, 2010
This is a terrible situation. Which bank is asking for the 2nd appraisal, your lender or the seller's?
1 vote
Mike Young, Other Pro, Fairfield, CA
Fri Jun 28, 2013
If the property was recently renovated and being "flipped" there is a requirement for a second appraisal- this would be up to the bank but might be your expense . If on the other hand the first appraisal was not acceptable and the bank ordered a second one they should pay for it. NOT YOU.
0 votes
David Thomas, Agent, Petaluma, CA
Fri Dec 9, 2011
Unfortunately, yes. Banks can do pretty much what they feel is necessary to confidently lend money.

Has the pendulum swung too far to the conservative? Absolutely.

Maybe the bank doesn't want to lend you the money. Have you asked to negotiate a better rate for the inconvenience? Worth a shot.

Good luck!
0 votes
Caroline Choi, Agent, Los Angeles, CA
Tue Dec 14, 2010
Sorry you've been having a hard time of it, but with short sales, this is not uncommon. Crazy things have happened with short sales, so if it looks like it's moving toward closing, it is a good thing!

You should talk with your lender and figure out if this is something he or she can negotiate away for you. If this is a second appraisal because the bank is dissatisfied with what the appraisal came back at, that's really more on them than it is on you, and the onus should be on them to either reduce the price down or provide comps to try to alter the 1st appraisal. If not, the bank is likely concerned the market value has changed since the last appraisal, and it's one more thing that needs to get done before you can move on. Your call -- is $500 worth it to you to have this home? Best of luck.
0 votes
Mirjam de Ri…, Agent, Santa Rosa, CA
Tue Dec 14, 2010
Due to the tougher lending guidelines, it is not uncommon for this to happen. It is very frustrating, you might want to ask the lender you are working with whether there are other issues that might have to be addressed. If a second appraisal is the only issue then it sounds like you are almost there.
0 votes
Team Anders, Agent, Grand Rapids, MI
Tue Dec 14, 2010
Yes a bank doesn't need to fund your mortgage if they aren't happy with an appraisal. If you signed all of your loan closing docs at the title co/or lawyers office(depending on where you are in the country) then it should have closed. If all you have signed is the loan application then you have to follow what the loan officer needs. Obtaining a mortgage is very tough right now. Our advice to you is, do you really like the home? Is it worth it to you, to stick around and wait for another appraisal to come back even if it may be lower and then the deal may have an issue closing? There are a fair amount of questions you and your Realtor should be talking about. Good luck and hopefully you are really happy with your new home once you get it!
0 votes
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