Desk Appraisal is killing deal - 1 day before signing - HELP!

[Smokey Bear]

You get to keep the deposit,, make sure your RE Agent knows you are planning on keeping it...

Not necessarly - it depends on whether the contingencies have been removed. You need a lawyer to look at the contract to determine whether you get to keep the $$$.

 

[Metamorphic]

What city?

I think 1 of 2 scenarios is most likely. 1) The first appraisal was junk, the appraiser just did some hand waving and put down the contract price. The bank realized it, ordered and desktop, perhaps one "enhanced" by the info from the first appraisal, and has more confience in the desktop. 2) The first appraisal was competently done, but the bank is risk adverse and so they do desktops/LARAs/etc on all appraisals, that frequently result in a value 10-15% lower than the previous appraisal ("No, no predetermined value here, that's just a coincidence"). By putting up the scape goat of the desktop they get to blame the appraisers instead of having everybody mad at the bank/underwriters.

The lender wouldent be Bank of America by any chance. This has been SOP for them recently in my experience.

 

[schnieds]

Thanks for the information, advice and input everyone - I really appreciate it.

1) Home is in Folsom, CA
2) $8K earnest money was put down by the buyers
3) It is an FHA loan - I don't have information on exactly who their lender is
4) Both real estate agents (ours and the buyers) are trying to get the Field Review scheduled today
5) Original appraisal was done by a licensed and qualified appraiser, who seemed to be very knowledgeable and thorough
6) Loan contingencies were removed. I am going to inquire further about the earnest money with our real estate agent.
7) We (us and the buyers) are willing to work the numbers to make a lower house contract price work if we can get the appraisal within reach of the original price.

At this point we are waiting for the field review and then see what happens. I am going to speak with a real estate lawyer if the field review doesn't come anywhere close to what we need.

 

[Webbed Feet]

I dispute that ANY real estate appraisal is "killing the deal!"

All real estate appraisals are nothing more than one person's opinion of value. Nothing stops any buyer from going to a different lender. No lender is forced to purposely consider one appraisal over another, most especially when it was the lender themselves that altered the scope (the way the appraisal was done), and altering the scope is highly likely to alter the outcome.

Your buyer has lending problems. The entire lending industry has appraisal problems that are of their own making. If the entire lending side had of spent the last decade promoting, demanding, and ensuring high quality appraisals by allowing proper time for them and demanding good appraisers, you would not be going through this. Instead, the entire lending industry has been, and is, actively participating in one giant lie about obtaining quality appraisals and instead only obtain fast and cheap ones without any regard to the skills, abilities, or ethics of who does them.

 

[Webbed Feet]

Thanks for the information, advice and input everyone - I really appreciate it.

1) Home is in Folsom, CA
2) $8K earnest money was put down by the buyers
3) It is an FHA loan - I don't have information on exactly who their lender is
4) Both real estate agents (ours and the buyers) are trying to get the Field Review scheduled today
5) Original appraisal was done by a licensed and qualified appraiser, who seemed to be very knowledgeable and thorough
6) Loan contingencies were removed. I am going to inquire further about the earnest money with our real estate agent.
7) We (us and the buyers) are willing to work the numbers to make a lower house contract price work if we can get the appraisal within reach of the original price.

At this point we are waiting for the field review and then see what happens. I am going to speak with a real estate lawyer if the field review doesn't come anywhere close to what we need.

You are suffering from vast misconceptions.. Per your numbering;

3) the last part is one of the number one mistakes sellers all over America are making. Accepting ANY offer to purchase without knowing who the buyer's lender will be or without stating in writing that no offer of any buyer intending to use certain particular lenders will not be accepted. There has been so much Donkey Kong going on, sellers across America should all be blacklisting certain lenders and the appraisal ordering machines they use.

4) The "Field Review" is not the physical inspection of the reviewer!

5) Good for that person then.

7) That one isn't up to you. You all may have a goal of 'get the appraisal within.......................," but all appraisers are required to be unbiased regardless of your need to close a sale. Anything less and our work would be meaningless.

You have know idea what the scope of the "Field Review" that has been ordered is! Your misunderstanding is rooted in a belief that "Appraisals" are the forms lenders order and not the scope determined needed by the appraiser and that appraiser's opinions. We can "review" an appraisal report and make no personal opinion of value of our own whatsoever.

 

[Elliott]

Schnieds,
Banks aren't all that interested in making loans in this market.
They are suppose to make loans, but I think, especially the big lenders,
have been told to do things by the book. Loans are being scrutinized
and if they can make it a 'better' loan on the banks books, they will do it.
Good luck....I'm afraid you just have to hang in there.

 

[Metamorphic]

I looked up your property in the MLS and analyzed the market trends in that neighborhood. (What can I say, I'm home with a sick kid and I'm bored. )

If an appraiser took an optimistic view of your market they could say that "the market is showing strength with effectively stable prices since Early 2009", that would be the blue line. If they used a less sophisticated analysis of the market trend they would essentially see the market as the green like depicts; a downward trend that calculates out to about -1%/month. If you go with that -1%/month number, based on the last sales price (9 months ago) you're looking at a decline in value of about $40k. A pessimistic appraiser might also note that the market in that neighborhood is slow and getting slower and that 1/2 the sales in the last year were short/reos. You can see that the REO/shorts are selling about $15/sf less than the resales. So if you take that little bit of value away (maybe another 5 to 10%, you're into the $380k territory that the Desktop came back with.

Now, appraisers are suposed to appraise to fair "fair market value", not "distressed sale value" or "pesimistic investor value what can I sell it for as an REO if the market continues to tank value". But it sure seems like the internal desktop products that the banks are using to cut value are aimed at pesimistic worst case scenario market value.

 

[Mike Boyd]

The borrower should have a copy of the appraisal, (hopefully a PDF). When a value comes in below the sale price, the sellers agent will usually be forwarded the appraisal from the buyers' agent. Then your agent can send it to you. Then you can post the PDF here, so we can all look at it. :icon_mrgreen:

.........."the agent will usually be forwarded........"
THAT, I would like to see. LOL

Most purchase offers in CA have an appraisal clause that states if the report comes in below the contract price, the buyer has the right to cancel and all deposits returned to him. In that case, a determination would have to made as to which report is valid....the full report or the desk review. Only a judge can make that determination. Get lawyer to file an estoppel and hire a 3rd party appraiser...locally.

 

[George Ellerman]

Simply sounds like a bank trying to kill a deal and using the appraisal as their excuse. The appraisal reason is probably just the tip of the iceberg.
I would bet that the buyer was not very well vetted in the first place and the bank wanted out. Of course you'll never know that.I'd get a good grab-em-by-the-throat attorney to protect you money. Good luck.

 

[Webbed Feet]

<.....snip.....>
Now, appraisers are suposed to appraise to fair "fair market value", <.....snip.......>

Really? And what specific assignment types are we supposed to do that?