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Change Purchase Price?

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Anonymous

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Two months ago I received an appraisal order for new construction. The purchase price was $313,000 and a mortgage amount of $253,000. I inspected the property and had no problem (a new good quality McMansion on an old corn field surrounded by other McMansions. My estimate of value was $330,000.

Today I received a fax from the mortgage company directing me to change the purchase price to $316,000. and a copy of an ammendment to the agreement of sale dated after my valuation date. I don't know why they want this done and the new price is below my estimate of value. Should I amend my report to reflect the new contract price? If I do change the contract price how should I note the change in my report?
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
This one of those silly things that underwriters get bees in their bonnet about occassionally. I try to talk them out of it but if I can't, I will do the following. Change the sale price at the top of the URAR with the new signature date of the new contract (which HAS to be provided to me before anything else). Which then changes the info in the sales comparison grid. Then on both the front and the back page of the URAR I use statements that the the sales price and contract date were changed at the clients (including the name of the client) request, that the original effective date of the opinion of value remains, additional market research was not completed, the change in purchase price and new contract signature date does not have any effect on the final opinion of value or change the original effective date of the opinion of value. However your signature date has changed to reflect the information provided by the client on a date after the effective date of the opinion of value. Describe everything the client is doing, putting the total responsibility on the client. Print out a new package, email the new package to them with your invoice.
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
Ditto Jo Ann, however here is another point to consider. You state it was new construction. Was it complete or under construction? What is the reason of the increase in price. If you did the appraisal subject to completion, has there been a change order that has caused the finished product to be different than the specs you appraised the home to? I would definantely word something to the effect that the change order was not considered when the original estimate of value was prepared and that the change in sales price was made at the clients request.
 

Jim Bartley

Senior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
These requests are almost always the result of a change order. As long as I have the documentation, I comply with the request. If you feel its needed, but in an addendum explaining what you did and why.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
If there is a physical change to the subject than an appraiser could do an Updated Appraisal or an Update to an Appraisal letter. That would mean a new visit to the property, a new effective date of opinion of value, new market research and possibly a change to the value (up or down depending on the market). However, these bees in the bonnet type of request usually don't go that far. Some cleark with a check list gets all upset because the sales price on the latest contract doesn't match the sales price on the appraisal and then the appraiser gets these "dumb" requests to change the purchase price on the report itself. And with the difference between the original appraisal value and the final purchase price, it doesn't appear that the changes to the purchase contract make any difference. So the borrower is just spending more money, their LTV is higher or the borrower is coming up with some additional cash; and maybe the borrower and lender can handle all that but the clerk with the check list has to be made happy.
 

Larry Lyke

Senior Member
Joined
Feb 2, 2002
Amen Jo Ann et al --

I ask the client if they will accept an addendum with all the pertinent facts covered.

The reply is invariably, "Yes."

Then I address each issue in turn throughout the appraisal with a new effective date, if necessary, and new signature date with a full signature block.

And I send it out EDI as a new (last) page. I include a new Index/Title Page so they can elect to put it on as a cover page.
 
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