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  #1  
Old 05-02-2012, 07:32 AM
vanoastsj vanoastsj is offline
 
Join Date: May 2012
State: Michigan
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Default Overbidding on a HUD

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!!
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  #2  
Old 05-02-2012, 07:36 AM
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J Grant J Grant is offline
 
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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  
Old 05-02-2012, 07:40 AM
vanoastsj vanoastsj is offline
 
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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  
Old 05-02-2012, 08:02 AM
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J Grant J Grant is offline
 
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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 by J Grant : 05-02-2012 at 08:13 AM.
  #5  
Old 05-02-2012, 08:19 AM
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zdfenton zdfenton is offline
 
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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  
Old 05-02-2012, 08:44 AM
Denis DeSaix Denis DeSaix is offline
 
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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  
Old 05-02-2012, 08:51 AM
Doug DeMars's Avatar
Doug DeMars Doug DeMars is offline
 
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Quote:
Originally Posted by zdfenton View Post
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.
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.
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  #8  
Old 05-02-2012, 09:05 AM
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zdfenton zdfenton is offline
 
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Assuming the facts here are accurate, that this is a HUD REO and they had an appraisal performed to establish the listing price, if they're within it's validity period they're stuck with it. The higher purchase price is irrelevant

See ML 2010-08

http://portal.hud.gov/hudportal/docu...=DOC_16702.pdf
  #9  
Old 05-02-2012, 09:07 AM
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pat outlaw pat outlaw is online now
 
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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  
Old 05-02-2012, 10:04 AM
Alan Gertner Alan Gertner is offline
 
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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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