Appraisers' Free Forum

Edd Gillespie wrote:Sounds to me like Mr. Ling Ling has decided to buy and Mrs. Ling Ling doesn't think its a good idea. Are we getting involved in a domestic dispute here? If so, I would reccommend before anything more is said by us that Mr. & Mrs. Ling Ling discuss this matter and decide what they, as a team, want to do about this.

Without all the data, there is nothing to discuss. I appreciate all your input.

Upon advice of you and another friend, we went to a bank to put in a loan application without the purchase agreement. We informed the lender (National City) that we would put 20% down and finance the rest of it. The actual purchase price will be the appraisal that the lender come up. We paid the lender the appraisal fee and provided all the info (including our lease). I have no contact with the lender’s appraiser. The lender's appraisal came back 100K (~500K) less than the appraisal the seller hired (~600K). At the same time, the seller had his appraiser reduced the price a little bit. I told seller that I would pay the price according to the lender's appraisal. Well, the seller is a big corporation who decides to get rid of that building (according to their local CEO) but we have to deal with their real estate office. Now my question is whose appraisal (lender or seller) would be honored in this market? What is your opinion? Personally, I trust lender’s appraisal just because I know that seller can’t influence the decision. What is the best approach for me to convince seller that the lender's appraisal is a fair market value?

The strongest argument you have is that the bank will only lend based on the appraisal it got and you don't have enough money to pay the difference and the bank won't accept any seller financing. Hang on, my bet is they will come close to meeting your terms based on what you gave us as a description. Give 'em time to sort it out, you're probably dealing with a committee.

Go slow, be firm. You look like their best bet for any sale to me.

LingLing,
It's the lender's money; he can rely on whatever he wants--and they'll usually rely on their own appraisal.

If it were me, I'd tell the seller that $X00,000 {lender's value} is all I can make the payments on, I can't put any more down, and $500K is all the lender will lend on. Since the seller is a big corporation, and since the market has likely declined since you started this thread, the corporate owner may go for it if he wants to dispose of the property.

BTW, you said,

At the same time, the seller had his appraiser reduced the price a little bit.

That's not the right way to do things. No client of mine is going to get me to change my opinion of market value without providing some pretty strong evidence for doing so. Seller's appraisal is now under suspicion, as far as I'm concerned.

Both of you are right. We probably are dealing with a committee that includes several lawyers. Yes, the seller is sending their new appraisal to me overnight via Fedex after he received our appraisal. I told him that I am not interested in that appraisal and will stay with our lender. He asks me to take a look and price is reduced a little bit.

The seller (Corporate real estate officer) is asking my permission to talk with our appraiser. I give him the banker's phone number. I am wondering whether it is possible for the seller, as powerful as it is, to talk to our lender to influence its appraisal.

If your lender trusts that appraiser, it's not bloody likely that the seller will influence the appraisal.

Jim Plante wrote:If your lender trusts that appraiser, it's not bloody likely that the seller will influence the appraisal.

Thank you very much. I will post as I hear more from them.

Just hear from seller's representative. He kind of told me that their firm only relies on their own appraiser's appraisal because their appraiser is MAI certified. Somehow, he thinks I am stupid enough to buy this argument. I call the bank and find out their appraiser is also MAI certified. I told him that our appraiser is also MAI certified and I just don't have additional money to pay above the fair market value. We didn't offer anything that is lower than the lender's appraisal. We just want to pay FMV. Well, let's see. FBI is doing investigation in Las vegas on inflated appraisals and maybe I can report seller's apprasiers. Just kidding. Thank you again to guide me through this confusing time. Let me know if I am doing something stupid.

Let'em think about it a while, and be prepared to walk away. Write them a nice letter, telling them that you're prepared to pay the $500K or so which was determined to be the market value of the property according to Joe Smith, MAI, who appraised the property for your lender. Be sure to put a time limit on that offer, though. Thirty days should do it.

"I offer to pay $500,000 for your property located at 123 Four Street, Miami, FL. The price offered is the market value of your property as stated by Joe L. Smith, MAI, who appraised it for BigBank, Inc., on January 23, 2008. This offer will expire at 12:00 noon, on March 8, 2008." (Never make a purchase or sale offer without an expiration date.)

Sign and send. Then wait. Along about the first week in March, I'll bet they call you back. DO NOT call them during the interim. Let us know how it goes.

Jim Plante wrote:Let'em think about it a while, and be prepared to walk away. Write them a nice letter, telling them that you're prepared to pay the $500K or so which was determined to be the market value of the property according to Joe Smith, MAI, who appraised the property for your lender. Be sure to put a time limit on that offer, though. Thirty days should do it.

"I offer to pay $500,000 for your property located at 123 Four Street, Miami, FL. The price offered is the market value of your property as stated by Joe L. Smith, MAI, who appraised it for BigBank, Inc., on January 23, 2008. This offer will expire at 12:00 noon, on March 8, 2008." (Never make a purchase or sale offer without an expiration date.)

Sign and send. Then wait. Along about the first week in March, I'll bet they call you back. DO NOT call them during the interim. Let us know how it goes.

Thanks. I just did what you suggested and will keep you informed.

Hi, all,
I just received their new appraisal. Well, actually, instead of reducing the price, the price was increased 100K due to a mistake.

Here are details. We mutually agree to purchase the condo as a shell price plus the build up allowance contributed by the seller.

First appraisal, they add shell price (~500K) and build up allowance (~110K) to come up ~$610K.
The new appraisal, only shell price is ~590K and they forgot to add build allowance. I know the seller is trying to sell me at ~590K. They just made up the number and they forgot to mention the build up allowance. If the build up allowance is added, it will be ~$700K.

The seller’s appraiser is definitely controlled by the seller. He is working for the seller. He is definitely not working to determine the FMV. May I report him or ask for an investigation?

Ask your MAI for a desk review of his report. A review is an expression of the opinion of the quality of another appraiser's work, or part of another appraiser's work.

A full forensic review will require a large fee, so try a desk review first. If your MAI agrees that the report is faulty, then send the report and the review to the Florida Real Estate Appraisers Board (FREAB) along with your complaint. You should be able to get a complaint form online.

If the report is judged to be faulty, you should also send it to Appraisal Institute, attention Stephanie Coleman, for screening by that organization. You will receive only an acknowledgment of your complaint; you will not receive notification of any disciplinary action. But rest assured, if it is appropriate, disciplinary action will be taken.

LingLing - something is not right here - follow Mr Jim Plante's advice. That's a lot of money, in anyone's income, to be throwing around. Remember, the seller (aka Bank) wants to unload the product and not be stuck with it. In Florida, from what I've heard, prices are still on the decline.

And welcome back.

Thank you all.

I have two appraisals provided by the seller. The two reports have the same appraisal date and same appraiser. The first report determined the shell price at 180/sf (came up ~500K using the wrong total sf). The second one determined the shell price at 240/sf (came up ~590K). We are talking about the same office here at the same time. I will submit both reports for a review. Yes, I will do it. We are making a living and I can't believe what this appraiser did.

May I send both reports plus a complain directly to the appraiser institute since it is so obvious at least in my untrained eye?