Before I jump right in to my effort to salvage the sale of my primary residence (and lose a lot of money in doing so), I wanted to see if I could get some good advice.
Here’s the situation:
I bought my house for 141K 5 years ago. I spent an additional 15K on a huge deck and high end hot tub (total invested about 160K overall). The neighborhood I live in is great, but people keep selling their houses quick for low prices. Identical housing plans 1/2 mile away are getting 15K more on average for no reason. Every time a house is undersold in my neighborhood, the next person to sell is affected by low comps, and the chain goes on continuously. Anyway, we put our house up FSBO for 182.5K. Two realtors looked at it and said to list for 179900 and 189900. Within a couple weeks we had a contract signed for our asking price to the first person who looked at the house. They were ecstatic about the house and the price, saying they had looked at over 30 houses 20-30K higher that they hadn’t liked nearly as much. The couple were preapproved for well over what we were selling the house at.
We signed the contract and they took it to their bank. The next day they called and said there was a problem. The bank sent their appraisor to do the appraisal, and the guy never even came to the house. He looked up comps from our develpment only (no neighboring plans) and said the house won’t come close. We have the nicest house in the plan, with the best location (very private cul de sac), and 30K of extras other houses don’t have (8K hottub, 10K deck, 4K cedar fence, 2K shed, TONS of landscaping, etc., etc.). Now the couple is unable to buy the house and are fearful that they would get hurt come time to resell. I can have another appraisal done, but I don’t think their bank would accept it, and I don’t know that the new apprasial would neccessarily come in high enough (depending on comps used) anyway. -I know an appraisor who would give me an appraisal of 6,000,000,000.00 if I needed it, but again, when a bank does another appraisal, I don’t know that I would have done myself any favors in the end.
Do I have any options other than just giving away 15-20K off the selling price of our house to appease the appraisor?
I have to figure something out and deal with this this weekend, so any good but quick advice would sure help.
Thanks.
buckeyes…
the same thing is happening in some parts of southern cali where i’m from… houses are selling over value. but what i want to know is did you hire the Realtor or did you just get there opinion.
If you stated your contract correctly, you can ask the buyer to waive appraisel contingency. It will be up to the buyer to come up with the difference in appraisel and your asking price so you can sell your property on your terms. If they decide not to go ahead with the deal then you can keep there initial depost, because they broke the contract.
well thats how it works in California.
Hello!
Well, where there is a will, there is a way. You can carryback a second mortgage for the difference. You didn’t state what the actual loan amounts were that you have outstanding and what is the appraised value is. You also could do a wrap around mortgage for your buyers and they could refinance later for their own mortgage loan. (If you do the wrap around mortgage, use a lawyer to protect you and them.)
Ray
I’D HATE TO SEE YOU GIVE UP THE EXTRA 15-20K OR EVEN HAVE TO CARRY IT BACK. THE BUYERS THEMSELVES SAID THAT HOUSES WERE PRICED MUCH HIGHER. YOU SHOULD TRY TO GET ANOTHER APPRAISAL ANYWAY DON’T APPRAISERS HAVE TO TAKE PICTURES INSIDE AND OUT HOW DID HE COME UP WITH HIS NUMBERS. YOU CAN ALSO ASK THE BUYERS LOAN OFFICER CAN HE FIND A LOAN DO A DIFFERENT BANK AND DO ANOTHER APPRAISAL THEY SHOULD BE WILLING TO LOOK INTO IT IF THEY WANT TO SAVE THE DEAL.
NX,
I interviewed 2 realtors a few days after we put the house up fsbo - just in case. We had already run a 3 week ad in the paper pricing the house @182K. So though the two realtors came up with numbers above and below our price, we stuck with our initial figure. In interviewing the realtors, we told them up front that we were going to continue for at least the 3 weeks fsbo, and if things don’t look promising we would hire a realtor - which I REALLY want to avoid.
Ray,
I am going to discuss holding a 2nd with them (it’s been a while, I don’t remember the details of a wrap around but I have the basic idea) - but my problem is going to be now that they are concerned that they are going to get hurt in resell (Ohio is the 2nd worst appreciation state in the country, so rarely in ohio can you sell to someone propecting that appreciation will take care of overpaying).
Katrina,
We ordered an appraisal and it will be done on Wednesday. We are going to sit down with the buyers next weekend and see what we can work out. The problem still remains that they are concerned about the sales prices in the area. Regardless of the next appraisal, I’m sure they are going to offer less. They like the house, but I doubt changing lenders will appeal to them.
I’m going to explain to them that even though our house is more than other houses in the neighborhood have been selling at, the house has a lot of valuable extras - and as soon as one house sells for 180 (ours) all other homes in the neighborhood will have the comparable and all home values increase in result. I don’t know, however, if that logic will appeal to them (they would be the guinee pigs).
Thanks for all the input!
The bank isn’t going to use another appraiser if they have their own in-house people because like you said, there are appraisers out there that will “hit the number”.
You might try having the buyers go to a different lender who will use another appraiser but it sounds like there are too many comps in your immediate area for them to go 1/2 mile outside the area to get comps. A comp is just what it sounds like, a comparable sale in the neighborhood.
From the buyers side, they would be crazy to pay you an extra $20k if the appraisal comes in at the lower price. But if they really want it, they might. The bank isn’t going to lend more than what they can sell the property at right away if you default. In a quickly appreciating market like San Diego, the banks will allow a higher than appraised value if they can prove a trend. I don’t know if you are in that type of market.
I can have another appraisal done, but I don’t think their bank would accept it, and I don’t know that the new apprasial would neccessarily come in high enough (depending on comps used) anyway. -I know an appraisor who would give me an appraisal of 6,000,000,000.00 if I needed it, but again, when a bank does another appraisal, I don’t know that I would have done myself any favors in the end.
Well The bank is very bias with the appraisal and it is in there best interest to have a low appraisal that is why they hired him to do the appraisal.
Do I have any options other than just giving away 15-20K off the selling price of our house to appease the appraisor?
Th only other option is if the buyer is willing to go to an other bank or broker and get an independant appraisal then you might have a chance other wise the buyers do have the right to use the bank and appraiser of choice. and now they may have been spooked about the value and thus they have been poisened by the bankand their appraisal. That is the problem with Drive by apprasals
I have to figure something out and deal with this this weekend, so any good but quick advice would sure help.
I would consider getting a back up offer and use a broker not a bank I know it UTAH my state alows the seller to choose the lender if they want to so that they have representation