Appraisers' Free Forum

Anyone seeing property that is sold only to have financing fall thru at the last minute...often after saying the appraisal wasn't high enough or changing the LTV required? I have seen 3 deals fall apart for my nephew and he is getting pretty frustrated. One he expected because the house is old and crummy. But the others were "lead pipe" cinch where the lender got cold feet at the last minute.

I am hearing agents say that it is not a done deal until after closing now as so many are falling apart well after the deal is supposedly sealed. My market is now requiring 10% down payment for many lenders because of being in a declining market area; that is making it a lot more difficult to get financing, which in turn further hurts house sales. Buyers are also getting cold feet and are looking for weasel clauses out of contracts.

Our house is going on the market next week (the only way I can justify this sale is if we buy in the same crappy market). Will be able to tell you first hand whether we have contracts at all let alone if they fall through.

Wish us luck.

BOY HOWDY!

Many lenders are requiring 10% down here as well.

Agents are finding themselves having to sell homes two & three times before they can get a deal to close. Fear of the fear rules the day.

I was recently asked my opinion about what was taking place in a new construction neighborhood;

Three appraisers 'pencil search' a property & all three come up with the same number. All three are experienced appraisers, with good reputations. So the value must be what all three of these good, experienced appraisers are say it is right? Not so fast...

I ask myself how all three can arrive @ the same value ($32,000 lower than the contract price) independent of one another. Well...all three apparently use the highest pending sale (not even a model match) to hang their hats on. Since then...another property is under contract $12,000 higher than the previously highest pending sale. Now what do you think their estimated value would be...$20,000 lower than the contract price of the subject is my guess

They simply want to know what the highest price is, and they won't go beyond it. That's not appraising folks!

I gathered information for two days & put together a paired sales analysis on a shreadsheet to prove how much contributory value options carry in the marketplace. When the appraisers were asked about contributory value of options they hymed & hawed and never gave a straight answer...about all we got was, "well...the market isn't recognizing options right now."

Nobody wanted to even look at what I'd put together, and I had 10 paired sales!!!!!!!!!!!

Another common comment was, "...it won't get by underwriting." Well again...that's not appraising folks!

It boils down to this; everyone's afraid to invest in real estate right now. Lenders are worried that the FBI will come through their doors next. As a result underwriting standards have gone from lax to too restrictive (pesky pendulum!). And appraisers are afraid to be put under the microscope.

Until the fear subsides...it's going to be very difficult selling anything

I'm not talking to anyone unless they have cash, or will have cash with the sale of their home. Most lenders in my area are also back to regular old 1990's style banking... 10% down and PMI, or 20% down and no PMI.

Ter Shields wrote:Anyone seeing property that is sold only to have financing fall thru at the last minute...often after saying the appraisal wasn't high enough or changing the LTV required? I have seen 3 deals fall apart for my nephew and he is getting pretty frustrated. One he expected because the house is old and crummy. But the others were "lead pipe" cinch where the lender got cold feet at the last minute.

Yes, routinely.

And here - almost daily - they go into pending and then back on the market - could be a long time watching this............................

Yup. Happening all the time.

The solution is simple.

1. The agent has the buyer prequalified at the local bank for a loan of $200,000, with $20,000 down ($220K purchase price)....which the buyer has.

2. The agent and the buyer agree they will not look at any houses where the list price is higher than $200,000. This will give them a 10% pad for the appraisal, it also means to do not max out their borrowing potential.

3. They proceed and look at homes. If the appraisal is a little short, big deal, they already got it covered.

Where most folks get into trouble is when they try to max out absolutely everything. If anything at all is slightly out of perfect alignment, the deal is dead. If the loan does go through and anything happens in their lifestyle (a new set of tires for the car) they are gonna go into foreclosure because they can not afford any little bumps in their financial road.

Yep, happening a bunch here & for all the reasons already posted.

One good thing is also happening. Most of the agents still around are the old & hardened ones. I'm talking to more and more who will not even bother with buyers and seller trying the nonsense of the past few years.

This is happening quite a bit around here and there seems to be no way to avoid it because programs disappear on a moment's notice and underwriting decisions change even quicker, making a formerly acceptable loan decision yesterday unacceptable today.

Things are really crazy here! We have our house under contract, cash deal. We are buying a place half the price of our current, with a mortgage 1/3rd of the old and with a 50% down payment and high 700 credit scores, the banks are still asking tons of questions. One wants to see the HUD1 on our house we are selling to approve us for the loan, never mind that it is closing one hour before the one we are buying. Crazy times. I am just crossing fingers things don't fall apart at the last minute. Closing is set to happen in 10 days!

Good luck Serena! I'm crossing my fingers (and toes) for you!

I've never heard of anyone asking for a HUD1 for loan approval ... that is very strange to me.

I have not actually seen such a thing lately, but have heard many stories similar to those posted in this thread. It is an event I've heard of before... even in the distant past... it would be expected for it to be more common now than a few years ago, partly because appraisers are being more careful and partly because lending requirements have tightened. However, this kind of thing was not too uncommon back in the early 80's... more because of lending requirements and super-high interest rates than because of appraisal.

It has been happening here also; but you know what, this is the time when the real appraiser should step up and put their Money where there mouth is ! I don't appraise according to what anyone needs, I provide data from the market that provides an indication of value supported by my opinion. I have not and will not change my approach to appraising everytime some Lender screws up market History, after all it is their fault Not mine. I don' ever recall contacting any of them and advising them to allow the public at large to use their Homes as a "cash cow machine", but they most certainly allowed it by way of; 100% funding and 125% funding programs they offered.

Just a note, most Lenders are now requiring "Listings & Pendings" data; that stuff in this market is aboslutely "worthless", right along with the 6 month and 1 mile guideline. Hey, you wanna stagnate the market, "payback" is always a bitch - U create the havic and I work within it, that does not change the approach needed to see what the market is doing. Anyone not see a sale for over $1Mil ? $750k? $500K? $400k ? $300k? $200k? or less in their area over the past 12 months ?? (And no, I don't mean in the area's where it's not typical anyway). If you have the data, you should be able to use some logic and develop a value, thats supportable.

Now I know some of you are going to take flight and allow bird droppings to rain on my parade, but I feel really safe in the snowglobe, so fire away, we have put up the "Rubber Biscut Shield".........ROFL

Jay Trotta wrote:If you have the data, you should be able to use some logic and develop a value, thats supportable.

Ahh, that's the easy way, Jay. The real trick is doing that when you don't have the data.