Finding the right appraiser...

[CGinMN]

If the rates were to drop then the buyer would have spent a significant amount in price premium for no reason.

Great point.

 

[djd09]

tell them to pay the saving in cash on the side...

 

[shrubberyvaluation]

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.

It depends on the type of value for the appraisal. For market value, which is the most typical, you are correct.

 

[Sadie]

I think that it would be hard to monetize the assumable mortgage. Your potential buyers would either have to put down a larger than typical down payment or get a second mortgage to cover the difference, Either one is not an ideal situation for a buyer.

 

[Tom D]

Not all assumables release the original owner from liability, so check to be sure. So how much more do you think that assumable will add to the price, and will the buyer have that cash on hand, or want to pay x amount more. I think that it's a short term benefit. This is sorta like buying down the interest rate. And the buyer with more cash is not expecting to pay more for a house, especially if they pay their own r.e. agent.

 

[swandel1]

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.

I call your attention to the FNMA Selling Guide - specifically on the Contract Analysis:

Note: Financial assistance or concessions paid by any party on behalf of the borrower includes both monetary and non-monetary items, including below-market-rate mortgage financing, gifts of personal property, and payment of property taxes or HOA dues for a period of time.

with the key phrase being "including below-market-rate mortgage financing".

 

[Sadie]

When interest rates were 12%+, a low assumable mortgage was a really good deal. It has to be quite a bit lower than current market rates to attract a premium.

 

[TerryRohrer]

I call your attention to the FNMA Selling Guide - specifically on the Contract Analysis:

Note: Financial assistance or concessions paid by any party on behalf of the borrower includes both monetary and non-monetary items, including below-market-rate mortgage financing, gifts of personal property, and payment of property taxes or HOA dues for a period of time.

with the key phrase being "including below-market-rate mortgage financing".

So? That doesn't require an appraiser to calculate the value of below market interest rates in an assumption. There is an assumption that the subject is not encumbered in regard to market value.

 

[sputnam]

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.

You have no power and maybe no influence in appraiser selection... unless you hire one yourself. The Lender makes that choice... sometimes through the agency of an AMC (appraisal management company). The appraiser, whomever it is, won't value the assumable loan savings. Their job will be to value the real property. A financial advisor can help the Buyer determine whether a new loan or assuming the existing loan is better for them. All you can reasonably do is make sure that real estate agents and buyers are aware that the loan is assumable.

 

[Atlanta CG]

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..... :<)

WHAT??? Your honor, this appraiser adjusted his value upward because the seller gave him a nice bottle of wine.