Overbidding on a HUD

Discussion in 'FHA/HUD and VA' started by vanoastsj, May 2, 2012.

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  1. vanoastsj

    vanoastsj New Member

    0
    May 1, 2012
    Professional Status:
    General Public
    State:
    Michigan
    There is a HUD home listed in my area and has a "as-is" value of $100,000. My Wife & I bid $118,000 and the bidding ends in 7 days.

    We are financing with FHA (3.5%). Our real estate agent stated the house "should" have no problem appraising for the amount we offered ($118,000).

    Everything we read online states there CANNOT and WILL NOT be a second appraisal. If they will only allow us to finance $100,000, then we will have to come with $18,000 cash (which won't happen).

    Can somebody please explain to me who is correct and how this process actually works?

    Thank you!!
     
  2. J Grant

    J Grant Elite Member

    Top Poster Of Month

    58
    Dec 9, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Your RE agent is wrong, no agent can tell what a home "should" appraise for. This may or may not be grounds for compliant against agent.

    If the home appraises for less, sometimes the seller reduces the price to meet the appraised value, in the case of a HUD home at auction, I don't know if seller will or not. See what happens when/if you are the winning bid and an appraisal is done.
     
  3. vanoastsj

    vanoastsj New Member

    0
    May 1, 2012
    Professional Status:
    General Public
    State:
    Michigan
    First of all, thank you for the reply!

    So your saying somebody WILL do an FHA appraisal if our bid is accepted or does the FHA lender have to use the CURRENT AS-IS appraisal that is currently in place. I'm guessing this is what they used to determine the value of the property to list it?!?!?!
     
  4. J Grant

    J Grant Elite Member

    Top Poster Of Month

    58
    Dec 9, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Typically, when a buyer applies for a loan, that lender orders their own appraisal. But since this is a HUD auction program, not sure if they would rely on the HUD appraisal, but typically, lenders order their own.

    Call a few local lenders, tell them you bid on a HUD home and expect to have the winning bid, if you were to apply for an FHA loan with them, would they order their own appraisal?

    That will be the best way to get your answer.
     
    Last edited: May 2, 2012
  5. zdfenton

    zdfenton Junior Member

    2
    Nov 13, 2008
    Professional Status:
    Certified General Appraiser
    State:
    Wisconsin
    If there is an existing HUD REO appraisal within its validity period (120 days from the date marked "effective date" in the report) and you are utilizing FHA financing that will be the appraisal used for the financing.

    If the HUD REO appraisal is beyond its 120 day validity period your lender will have to order a new FHA appraisal.
     
  6. Denis DeSaix

    Denis DeSaix Elite Member

    44
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    Certainly a real estate agent can give you his/her opinion of what a property should appraise for. They are professionals that deal in the purchase and sale of real estate. They are giving you their opinion regarding property you are purchasing. That's what you are paying them to do.

    Despite the above, it is not the real estate agent who is doing the appraisal, but the appraiser. So, just because the real estate agent thinks the property is worth $X doesn't make it so: it is his/her opinion.
    The appraisal is based on the appraiser's opinion.

    You are over-bidding the property by 18%. That is significant. If the property was listed fairly, that over-bid may or may not be supported in the market.
    Your agent thinks the property is worth the 18% premium-over-listing for purposes of the bid.
    The appraiser will tell the lender what he/she thinks it is worth, based on the market data and what a "typical" buyer and seller would agree to.
    And, if there is already an FHA appraisal in-place (within the time limit), the appraiser has already formed his/her opinion.

    Good luck.
     
  7. Doug DeMars

    Doug DeMars Senior Member

    0
    Mar 20, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Maybe...I'm curious about the answer myself. If there was a REO appraisal completed 12 days or 120 days ago...does that prior report have a case #? If not...I don't see how it would trump a current FHA compliant appraisal. The purpose of the prior appraisal is quite different than the subsequent appraisal.
     
  8. zdfenton

    zdfenton Junior Member

    2
    Nov 13, 2008
    Professional Status:
    Certified General Appraiser
    State:
    Wisconsin
  9. pat outlaw

    pat outlaw Sophomore Member

    0
    Oct 6, 2003
    Professional Status:
    Licensed Appraiser
    State:
    North Carolina
    If there was a FHA listing appraisal done and it is less than the 120 days, it must be used. You can not get another appraisal. You will have to come up with the overbid amount plus the normal down payment.
     
  10. Alan Gertner

    Alan Gertner Member

    2
    Nov 1, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    If the HUD REO appraisal is $100k and you have market data which supports a $118k valuation, then this may be another scam by the listing realtor / appraiser. Commonly referred to as flopping.

    The listing realtor lists the property under the fair market value, buys the property at the depressed price then flips it for a quick profit. The buyer may be the listing realtor or their partner in the deal.

    If you can prove your claims, you should report this to the HUD REO staff.

    buene suerte.
     
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