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Captain Mortgage
2540 Posts |
 Posted - 07/01/2009 : 09:38:33 AM
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...and tells me that he just got the appraisal back. He said he has some bad news. They are still within the time for the appraisal contingency, and needed to cancel the deal. In this market I'm fully prepared for this conversation. Every freaking appraisal keeps getting cut.
Listing price was 300k, and he was the high bidder at 325k.
So I asked him, how bad is it? What did the appraisal come in at? He told me it came in at 340k. They were hoping that the appraisal was going to come in at 275k and they would get the house cheaper. Unbelievable! Can the appraisal contingency work this way? |
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Boulderco
1775 Posts |
Posted - 07/01/2009 : 09:43:52 AM
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| You're getting the value back from the Realtor? |
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phishandchips
46 Posts |
Posted - 07/01/2009 : 09:48:24 AM
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Welcome to the new world of real estate.
Make offer, get it accepted.....and bail if the value comes in!
What dirt bags. Check MLS, everything is "pending", but nothing is closing? hhhhhhmmmmmmmmm? |
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dtabar
1147 Posts |
Posted - 07/01/2009 : 09:52:09 AM
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| Bail or re-negotiate sales price. That's what I'm hearing from all of my Realtors. |
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Captain Mortgage
2540 Posts |
Posted - 07/01/2009 : 09:52:49 AM
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quote:
Originally posted by dtabar
Bail or re-negotiate sales price. That's what I'm hearing from all of my Realtors.
But the value came in! |
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tomsammon
124 Posts |
Posted - 07/01/2009 : 09:55:06 AM
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| The appraisal contingency in the purchase contract is only an out for the buyer if the appraisal is below the accepted offer price. They may have an inspection contigency or something else to get out. |
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WorldWideWayne
3094 Posts |
Posted - 07/01/2009 : 09:55:33 AM
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I believe this is a deal to be settled between the buyers and sellers attys.
If you have the contract, read the appraisal contingency clause...my bet is that it says something like the appraisal needs to support a min value of the sales price.
But in the end, it is still up to the attys as to how it plays out. |
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liverichly
6001 Posts |
Posted - 07/01/2009 : 10:01:38 AM
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quote:
Originally posted by Boulderco
You're getting the value back from the Realtor?
Yes I'm a bit confused on that one too. |
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KHufford
10370 Posts |
Posted - 07/01/2009 : 10:20:48 AM
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No damn way they can cancel, the Realtor is scamming....getting the top offer and then trying for low appraisals to lower the price after the fact. They are now stuck in contract, I would sue the hell out the buyer and his agent for that...
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Captain Mortgage
2540 Posts |
Posted - 07/01/2009 : 10:26:29 AM
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quote:
Originally posted by KHufford
No damn way they can cancel, the Realtor is scamming....getting the top offer and then trying for low appraisals to lower the price after the fact. They are now stuck in contract, I would sue the hell out the buyer and his agent for that...
Not at all worth the time or trouble. Plus they could always say from the inspection or loan, or the most recent excuse........I didn't know there were cows in chino |
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moneybroker
89 Posts |
Posted - 07/01/2009 : 10:27:54 AM
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In California, the standard appraisal clause states that the offer is contingent on the property appraising at no less than the offer price. There are certainly other ways of getting out of the contract, but this doesn't sound like one of them.
As far as why the Realtor is telling you the results of the appraisal, I too am baffled. |
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KHufford
10370 Posts |
Posted - 07/01/2009 : 10:28:07 AM
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quote:
Originally posted by Captain Mortgage
quote:
Originally posted by KHufford
No damn way they can cancel, the Realtor is scamming....getting the top offer and then trying for low appraisals to lower the price after the fact. They are now stuck in contract, I would sue the hell out the buyer and his agent for that...
Not at all worth the time or trouble. Plus they could always say from the inspection or loan, or the most recent excuse........I didn't know there were cows in chino
As the seller I would sue....as the LO I would let everyone know what they did,..in any event if they back out the earnest money is now the sellers.
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efrederick
1258 Posts |
Posted - 07/01/2009 : 10:32:31 AM
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quote:
Originally posted by KHufford
quote:
Originally posted by Captain Mortgage
quote:
Originally posted by KHufford
No damn way they can cancel, the Realtor is scamming....getting the top offer and then trying for low appraisals to lower the price after the fact. They are now stuck in contract, I would sue the hell out the buyer and his agent for that...
Not at all worth the time or trouble. Plus they could always say from the inspection or loan, or the most recent excuse........I didn't know there were cows in chino
As the seller I would sue....as the LO I would let everyone know what they did,..in any event if they back out the earnest money is now the sellers.
I'd let the agent's broker know the situation and if that doesn't do anything, let the ethics board at the state level know. I bet the situation gets resolved rather quickly. |
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benjamin
6856 Posts |
Posted - 07/01/2009 : 10:37:08 AM
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| I would agree with Efred. |
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moquinjm
199 Posts |
Posted - 07/01/2009 : 10:47:43 AM
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| This is a practice I had never heard about until about the past week, but is maybe the 5th time I've seen it mentioned since. This seems to be the new hot trend now that the "buy and bail", has been essentially phased out. |
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rainmand
5183 Posts |
Posted - 07/01/2009 : 12:04:08 PM
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| That'd be a nice scenario for a USDA loan. The homeowner would receive 100% financing for $340k and the buyer would be able to use the other 15k for fees. |
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craig@clcfunding
84 Posts |
Posted - 07/01/2009 : 1:48:06 PM
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| Is it an FHA deal? If so that appraisal will follow that property for 6 months...Crazy times.. |
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virgiltab
184 Posts |
Posted - 07/01/2009 : 2:07:50 PM
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quote:
Originally posted by phishandchips
Welcome to the new world of real estate.
Make offer, get it accepted.....and bail if the value comes in!
What dirt bags. Check MLS, everything is "pending", but nothing is closing? hhhhhhmmmmmmmmm?
I had this happen to me last year. The borrower actually called the appraiser after he completed the appraisal and *****ed at him about the comps used. It was a very solid appraisal, passed theough UW'ing with ease. The brrower then didn't want to purchase the home at the price they negotiated. He asked the buyers agent to go back to the seller with an offer 30K less. Original $ was 550K. The seller was outraged. But, and a big BUT, the Seller agreed to refinish all the original hardwoods, house was built in 1947, incredible home, and also repaint the entire interior, trim work, etc... to accomadate the buyer. The work was estimated to cost the seller about 25K, then the borrwer still said no. Walked away from an $8000 earnest money deposit. What a nightmare that was |
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mortgageguy2007
68 Posts |
Posted - 07/01/2009 : 3:32:05 PM
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| Appraisal contingency is about the same time period of all the inspection/disclosure contingencies, they can probably back out for any reason. |
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kdwall
557 Posts |
Posted - 07/02/2009 : 08:16:46 AM
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| I hope they got a good chunk of earnest money. Not a penny would go back if it were me. |
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slants
4978 Posts |
Posted - 07/03/2009 : 4:32:38 PM
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quote:
Originally posted by KHufford
quote:
Originally posted by Captain Mortgage
quote:
Originally posted by KHufford
No damn way they can cancel, the Realtor is scamming....getting the top offer and then trying for low appraisals to lower the price after the fact. They are now stuck in contract, I would sue the hell out the buyer and his agent for that...
Not at all worth the time or trouble. Plus they could always say from the inspection or loan, or the most recent excuse........I didn't know there were cows in chino
As the seller I would sue....as the LO I would let everyone know what they did,..in any event if they back out the earnest money is now the sellers.
Money would be the Seller's only if that was the outcome from mediation/arbitration - a provision of all standard CA purchase agreements. Meanwhile, the seller cannot market the property to another buyer until there was a resolution. Most sellers will cave, let the buyer walk and contact all the other prospective buyers who offered over asking and get a deal closed fast. |
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ptrading
413 Posts |
Posted - 07/04/2009 : 05:59:38 AM
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Both the realtor and the buyer, should be strung up by the short hairs.
The appraisal contingency clause, should be used if the appraisal did not support the sales price PERIOD!
The seller should get a good attorney and keep the deposit, you should also contact the RE broker, but he probably won't care.
You would be amazed, at some of the stories, out there right now, buyers should be charged with predatory buying, we have created a theory of entitlement in the consumers head, they feel they should be able to get away with any level of manipulation, and have no responsibility for ethical behavior themselves.
But then again why should the buyer be any more responsible, than anyone else? |
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S Emmitt O Valh
2 Posts |
Posted - 07/04/2009 : 07:20:37 AM
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Is this another one of those "flawed" appraisals I keep hearing about ?
What's the matter with that appraiser.....he can't hit the target ;-) |
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slants
4978 Posts |
Posted - 07/04/2009 : 3:29:18 PM
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quote:
Originally posted by ptrading
Both the realtor and the buyer, should be strung up by the short hairs.
The appraisal contingency clause, should be used if the appraisal did not support the sales price PERIOD!
The seller should get a good attorney and keep the deposit, you should also contact the RE broker, but he probably won't care.
You would be amazed, at some of the stories, out there right now, buyers should be charged with predatory buying, we have created a theory of entitlement in the consumers head, they feel they should be able to get away with any level of manipulation, and have no responsibility for ethical behavior themselves.
But then again why should the buyer be any more responsible, than anyone else?
I agree that this is what SHOULD happen and is what I'd love to see happen; however, life if not always fair and things don't always happen as they should. If the seller wants to challenge the earnest money, he/she will be bound by mediation/arbitration. If Seller so desires to pursue it further and file suit (more than likely Small Claims amounts anyway), a Lis Pendens can be recorded on title whereby he cannot sell the house to anyone, period. Meanwhile, values may continue to decline and seller will sustaine further losses. Sometimes, it's more prudent to be practical and suck it up than to stand on principles. Seller has little choice than to acknowledge that he/she fell victim to lowlife selling agent/buyer and move on before other intereted buyers have found other properties and he has lost his audiance.
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peter
6401 Posts |
Posted - 07/04/2009 : 6:05:30 PM
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Craig wrote:
"Is it an FHA deal? If so that appraisal will follow that property for 6 months...Crazy times"
Craig, please explain why the FHA appraisal will follow that property
for 6 months even if the market price goes lower? The FHA appraisal
will have to be updated with current 30-day comps anyway and if the
value goes lower then the new FHA appraisal can go lower. Why Not?
Thanks,
Peter |
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slants
4978 Posts |
Posted - 07/04/2009 : 11:16:29 PM
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quote:
Originally posted by peter
Craig wrote:
"Is it an FHA deal? If so that appraisal will follow that property for 6 months...Crazy times"
Craig, please explain why the FHA appraisal will follow that property
for 6 months even if the market price goes lower? The FHA appraisal
will have to be updated with current 30-day comps anyway and if the
value goes lower then the new FHA appraisal can go lower. Why Not?
Thanks,
Peter
Bigger question is not what happens if values drop - obviously lower new appraisal will be used. I'm curious what HUD's policy is if values recover and higher appraisals come in on subsequent closings after the initial report has been logged in FHA connection. Many local markets in L.A. county are well on their way to recovery - we receive multiple above asking offers on 80% of our listings exactly as described in the OP scenario. What happens if an FHA appraisal has been logged but subsequent reports come in with higher value conclusions? |
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lucky1s
3982 Posts |
Posted - 07/05/2009 : 1:03:48 PM
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| I wonder if this was a short sale and the lien holder's appraisal came in higher than the purchase price. |
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peter
6401 Posts |
Posted - 07/05/2009 : 6:49:04 PM
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Slants wrote:
"I'm curious what HUD's policy is if values recover and higher appraisals come in on subsequent closings after the initial report has been logged in FHA connection. Many local markets in L.A. county are well on their way to recovery ..."
I just talked to my FHA appraiser who is familiar with HUD's policy on
this issue. He said that if the transaction has not been closed and
recorded with HUD, the value can also be increased or decreased base
on the current appraisal even if using the same case number.
I have an appraisal with him that was registered in FHA Connection
for $114,900 (MLS listed price) but today he completed the appraisal
and will deliver the value as $123,000. The FHA case number is being
transferred to me by another buyer's loan officer who couldn't
complete the loan due to his buyer-borrower lost his job. So, I should
be OK with the value of $123,000.
Slants is right, in some or many areas, home prices have recovered.
My subject is in Perris, Riverside and I think the values are perking
up a little now. In another area, Woodland Hills, CA., I also found
out that the value of my borrower's home has increased by $5,000 over
the past 4 months from Feb 09 based on closed comps in 30 days from
my appraiser.
Peter |
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slants
4978 Posts |
Posted - 07/05/2009 : 6:51:56 PM
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| Thanks for the feedback Peter. Good to know. I was concerned we would not be able to market to other FHA buyers if previous one has fallen out of escrow. |
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peter
6401 Posts |
Posted - 07/05/2009 : 7:02:57 PM
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Helen, I got a terrific FHA appraiser for Riverside who works
7 days including full day and evening on July 4th (yesterday)
and appraised a house for me. Just e-mail me if you need
someone other than Shawn.
Peter |
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slants
4978 Posts |
Posted - 07/05/2009 : 7:09:59 PM
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quote:
Originally posted by peter
Helen, I got a terrific FHA appraiser for Riverside who works
7 days including full day and evening on July 4th (yesterday)
and appraised a house for me. Just e-mail me if you need
someone other than Shawn.
Peter
Thanks Peter, we work strictly in LA & Ventura county as the Seller. I do very few loans these days. Primarily helping the seller market the properties he picks up at Trustee's Sales. |
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