I need some help
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I’m in the middle of selling my house, I have gotten the inspection passed with flying colors (except for the roof – but I knew that)
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I have an offer, have a contract, everything seems a go !!!
Then the mortgage company calls and drops a bombshell – appraisal comes in way low
I’m in an old neighborhood with mixed age homes (1909 – 2005 all within 0.5 miles), in a smallish town/community of 100K in N. Utah. I’ve spent a lot of time and effort upgrading and fixing up this house (high end kitchen – Wolf stove, granite counter top, bb counter tops, custom cabs, new plumb, new e-, insulation, etc, etc). Bottom line there is nothing in the neighborhood that compares (I was making it how I wanted – not with an eye to ever selling). Now I have some yahoo, not qualified to appraise a double wide with a satellite dish gives me a 30mph curb appraisal and is about to tank the deal.
Help! What can I do?
Replies
I am a Realtor, so I have some experience with situations like this. The Buyer's mortgage company most likely hired the appraiser so there might not be much you can do about it. You have a few things going against you- one is that the loan is now unlikely and two is that the buyer is probably second-guessing the purchase price and even if it appraises again for the sales price they might be inclined to re-negotiate. Talk to your Listing Agent (you are working with a real estate broker, right?)
Did the appraiser do a full appraisal or did they stop once they realized that it wasn't going to appraise high enough?
if they did a full appraisal, get a copy of it. Hire another appraiser or get the lender to hire another one- offer to pay for it.
I know you don't want to hear this, but your best bet might be to wait a year and sell it later.
"Bottom line there is nothing in the neighborhood that compares (I was making it how I wanted - not with an eye to ever selling). "
That might be the problem. A "250k" house in a neighborhood of 85k houses won't sell for for 250k.
However, a "250k" house in a neighbor hood of 400k houses will often sell for more.
That is in general. You talked about mixed age, but not mixed value.
Now I am in an area that is not only mixed age, but also values. Within 1000 ft of my house they range from $90k to 500k.
When I refi'd the apprisor did an excelant job of finding comps (one 20 miles away) and adjusting for age difference (30-50 years), garages, fireplaces and the like.
My first suggestion is to get a copy of the report and check it for factual errors. Might have to do some work in helping him find some comps.
I have also seen an apprisal on a difficult commercial property (a church) where the apprasior took the easy way out in trying to find comps.
Ask to see the appraisal. Sometimes they get lazy on the comps. If there hasn't been a lot of action in your neighborhood (where I live in UT the RE market is kind of flat), then the comps may be more than 6 months old, and you can call them on that. You might want to hire an appraiser to see what a second opinion comes in at - just to make sure you are being realistic. From your note you obviously realize that you won't get full 'value' for your home if you are not in the same range as your neighbors. If you upgrade your home too far above your neighbors, then you will never realize the investment.
Good luck, I hope you can work this out. Please let us know what happens.
Hi,
I'm an experienced appraiser.
Sounds like you may have overimproved your home for the neighborhood. Cost does not necessarily equal value. What is the typical sales price range in your neighborhood? Is your contract price way above it? If so you may have a problem demonstrating to a lender that your neighborhood will support such a high price.
I would consult an experienced realtor or appraiser. They may be able to find comparable sales or listing the appraiser missed. Often times when I appraise a difficult house I will go back farther in time to try and find a more comparable sale or use a comparable listing.
You can check current listings in you neighborhood by going to http://www.Realtor.com and doing a search on your zip code.
Good Luck. Email me privately if you need more help.
Mike
[email protected]
Mike K
Amateur Home Remodeler in Aurora, Illinois
All above is good advice and accurate. I did this on the first house I owned. If you own the best house in the neighborhood you are screwed. Because appraisels are not to compare your house with those fixed up the same but compare it with houses in your neighborhood of the same size and condition (not improvement level) and what they have sold for in the recent past. Sell for less or stay are about your only two options. DanT
Another option to consider although not often used, the appraisal only has to justify the loan amount that the buyer is borrowing, have the agent involved ask them if they would consider a larger down payment in order to purchase a home of high value. Remember next time that location is by far the hardest thing to change about any house. Do review the appraisal for mistakes, not often, but they do happen. How low was it, and of what type. Some of the appraisals have a life once issued, and can prove hard to change values. FHA used to be good for six months I think. Good luck
Dan
I agree that it sounds like your house is too nice for the neighborhood.
That said, the last three appraisers I dealt with asked me, "How much did you want it to appraise for?" Their numbers were surprisingly close to the numbers I stated. Imagine that! Property appraisal is extremely subjective, and it's very unlikely two appraisers will come up with the same number.
I took a few appraisal courses awhile back, just to enhance my investment property IQ. The instructor, who had been on state and national appraisal boards and had seen it all, said that, in the end, the value of a property is what it will sell for.
I'd consider paying for another independent appraisal. And best of luck to you. Selling a house is stressful enough without crap like this coming up.