Finding the right appraiser...

[OllieGarchy]

My wife and I will be selling our house. There are plenty of comps right in the neighborhood, including model matches. When the Buyer's Lender's appraiser comes out, there shouldn't be a problem.

However, we just recently learned that our mortgage is assumable (we're getting written confirmation from the lender). It's at a fixed 3.5% until 2047. With current average mortgage rates at around 6.75%, this presents a great savings opportunity for the buyer, should he or she assume it. So, whatever the comps indicate now, this savings is a premium and should be added on to the final purchase price.

Just to be clear, I don't care what this premium is. I don't care to know how to figure it out (at least not yet).

What I want to make sure of, though, is whomever the buyer's lender sends out to appraise our property, that appraiser will know how to value the assumable loan savings.

So how can our Listing Agent prepare for this?

Thanks.

 

[CGinMN]

 

[TerryRohrer]

From a valuation standpoint, the appraiser assumes the property is not encumbered, so your mortgage doesn't make any difference to market value. If a sale was found to have been funded with a loan assumption, the appraiser must determine if the terms of the assumed mortgage impacted the price and adjust that sale to remove the influence from the loan terms.

 

[CGinMN]

All you can do is advertise the loan is assumable and hope that a) a buyer is willing to pay you a significant premium, b) they have the means to make up the difference between the mortgage amount and the sale price, and c) your servicer is easy to work with. I don't think it's easy to pull this off.

 

[swandel1]

You're screwed - the typical "loan appraiser" has no clue how to figure this out. Your best bet is to do the math (if you can) and give it to the appraiser with the features, upgrades, and recent maintenance lists. They may or may not regurgitate what you give them, but atleast you will have their attention on this ascpect of the valuation. A bottle of Titos or a nice bottle of wine for the appraiser goes a long way also..... :<)

 

[TerryRohrer]

You're screwed - the typical "loan appraiser" has no clue how to figure this out. Your best bet is to do the math (if you can) and give it to the appraiser with the features, upgrades, and recent maintenance lists. They may or may not regurgitate what you give them, but atleast you will have their attention on this ascpect of the valuation. A bottle of Titos or a nice bottle of wine for the appraiser goes a long way also..... :<)

You might want to temper your dismissiveness of "the typical loan appraiser." Some can figure out that the seller's mortgage has nothing to do with the market value of the property, and that they have no need whatsoever to opine as the value of the seller's mortgage, facts which you seem to have missed.

 

[CGinMN]

Well, in the sellers shoes, I do agree your best bet is to find an appraiser who has no clue and offer him a handle of vodka.

 

[Terrel L. Shields]

Yes, you can figure the savings - Cash Equivalent Value. Ask your banker to do that calculation if they will - split the difference between current and your rate to give the buyer an incentive to assume the mortgage. The potential buyer actually might have a loan application with some better terms than most.

 

[Mark K]

Basically it would be a Net Present Value of the savings over a length of time.

However, appraisers do not (or should not) take creative financing into consideration. If the rates were to drop then the buyer would have spent a significant amount in price premium for no reason. If I was in your shoes I would price the home at a premium but don't expect an appraiser to take it into consideration during the valuation. If the buyer wants to take a risk and pay a premium, that's his business. Make sure there's an appraisal waiver in the purchase agreement.

 

[Bobby Bucks]

Much of it will depend on how much is required to put down to assume the mortgage. Back in the 80s and 90s there were millions of properties for sale with non-qualifying assumable loans that went with the property. (FHA) Now there seem to be a lot of properties coming on the market with VA assumable mortgages, but they must qualify. Ie. if the list price is $400,000 and the assumable mortgage is $350,000 it will get some attention , if it’s $400,000 and the assumable mortgage is $200,000, not so much. It’s still a “how much down?” process for most buyers.