help understanding what is happening

[Heather Husvar]

We're trying to purchase a house, but it and the land has to be appraised. We had an appraiser come out that the mortgage company (which is not in Ohio) set us up with. The appraiser came out and did all the measuring and walked through the house, etc. Now, we are well aware that the house is a major fixer-upper, but it's on 2 acres of land in an area where land is generally at a premium and has mostly been parceled off into .5 and 1 acre lots. Initially, when working with the mortgage broker we took toy numbers and said we knew that they weren't accurate because we were figuring that in reality the place would go for around 93,000 and we're looking to finance around 78,000. However, when the mortgage co. did a mock-up he did the estimated value of the property at 98 and 89. It really doesn't matter because none of it counts until the appraisal comes in. Here's what happened after the appraiser came and looked at things..

According to the mortgage company she called and said she was having difficulty finding comparable property in the area, and if she couldn't find any that she wouldn't be able to complete the appraisal and money would be refunded. Next day, she says she can't complete the appraisal. She tells us that she doesn't think she can get it as high as the mortgage company wants it to be (huh? So what? So appraise the darn thing lower is what I was thinking) and besides, she has a problem appraising a house that holds water in the basement (umm, this happens in lots of houses after heavy rains, especially in fixer uppers doesn't it? I'm confused as to why this is such a big deal that she can't complete the appraisal). At any rate, I get a little upset so I make her talk to my husband and she tells him the mortgage company said they didn't want her to complete the appraisal if they couldn't price it at 98.

The mortgage company says "We said no such thing!" and recommends that we have someone more familiar with the area come out. In the mean time, the appraiser says, "Oh, and no, we can't refund all of your money, only partial since we did actually come out and do something." I'm starting to feel rather frustrated here.

Anyways, so now we have been put through the ringer and we have a new appraiser scheduled to come out. Questions I have.. what happens if there isn't comparable property in the area? We are looking at a kind of unique lot. Is it really that much of a problem to buy a lot with a cruddy house and plan to remodel the house so it's nice? Was the original appraiser as incompetent as I'm thinking she is? Or is it me that's out of line? Is water in the basement really that huge of an issue that a house isn't worth buying?

Thanks for any help anyone can give me.
Heather

 

[Tim The Enchanter]

.. what happens if there isn't comparable property in the area? We are looking at a kind of unique lot.

In that case the appraiser would expand the search to find whatever comparable data there is. This makes for a harder job, they would probably want to charge more for it, but it should not be impossible based on what you've said here.

Is it really that much of a problem to buy a lot with a cruddy house and plan to remodel the house so it's nice?

Depending on how bad it is, you may have trouble getting a loan on it. but still it would have to be real bad to make that impossible. Assuming your credit and cash etc are not a problem, I am only addressing the property in question.

Was the original appraiser as incompetent as I'm thinking she is?

Hard to say. Kind of sounds like maybe so.

She tells us that she doesn't think she can get it as high as the mortgage company wants it to be

Maybe this is the real reason for the cancellation. Although this happens, it is illegal and unethical to make the appraisal contingent on "hitting" a particular number.

(huh? So what? So appraise the darn thing lower is what I was thinking)

This is how it is supposed to happen. Estimate the value wherever it belongs (in the appraisers opinion of course).

Or is it me that's out of line?

Doesn't sound like it, you just want to buy the house right? Your post is not flaming mad. :wink:

Is water in the basement really that huge of an issue that a house isn't worth buying?

I would just recommend caution, how much will the habitability issues like the basement cost to repair? I'm asuming you had a professional inspection (as opposed to an appraisal) so you'll at least hopefully know the real condition of the property in terms of what it needs and then you can get an idea of the cost to repair. Don't want to unknowingly but a Money Pit after all, do we?

I can't tell you what to do, but hopefully this gives you food for thought. Hopefully the second appraiser will work out better (as in reach a conclusion as to market value) and you can move forward.

Some others here may have some varying thoughts. There's plenty of those to go around here usually.

Good luck.

 

[Pamela Crowley (Florida)]

She tells us that she doesn't think she can get it as high as the mortgage company wants it to be (huh? So what? So appraise the darn thing lower is what I was thinking) and besides, she has a problem appraising a house that holds water in the basement (umm, this happens in lots of houses after heavy rains, especially in fixer uppers doesn't it? I'm confused as to why this is such a big deal that she can't complete the appraisal). At any rate, I get a little upset so I make her talk to my husband and she tells him the mortgage company said they didn't want her to complete the appraisal if they couldn't price it at 98.

I would have to say that the mortgage company and/or loan officer is unethical and if the appraiser actually said this, so is she.

Find a new mortgage company and a new appraiser. ASAP. Also, have a competent home inspector or building contractor inspect this house prior to doing anything else so that you will know what you are really getting in to. Give that report to the next appraiser so they can do a more complete appraisal with better information. There are loan programs for houses like this but, it is not easy to get a loan on a house that needs a lot of work.

Good luck! Please let us know what happens.

 

[Restrain]

The appraiser can't hit the number. At least the appraiser is up front with it. Apparently the appraiser has a 'relationship' with this lender where they stop if they can't make the numbers. It happens. The other side of the coin may be that the appraiser is afraid of the legal and appraisal problems with this home.

I would suggest that you pay for an independent appraisal from an appraiser who reports to YOU. Tell the appraiser you want to know what it's worth and not to consider the current asking price for the home, etc. to get an arms-length value estimate. After all, it's better to spend $250-350 for an appraisal than lose thousands.

 

[Anonymous]

Heather,

I understand what you are going through. I refuse to hit numbers for lenders and as a reslt, I dont work for a lot of them. My clients are typically those who lend their own money. I receive very few orders from loan originators (those that make a % on the loan).

I would call your bank. (Not your mortgage comany) Talk to a loan originator. They all know who they need to send an appriasal order to if they have to hit a number. They also know what appraiser they would use if it was them personally looking to buy that house. That is the appraiser you want to go out there.

If there are problems with the house (structural/mechanical), I would reccomend a good home inspector look at it. Then the appraiser could know upfront about any major problems.

Just out of curiousity, I wonder if you could get the appraiser to fax to you a copy of the lender's appraisal order? I wonder if it says something like "Value Needed: 98,000"?

 

[Paul Ness MAI]

Don't order an appraisal yourself if you intend to try and ultimately use it for financing. Lenders can not accept appraisals completed for borrowers.

It sounds like a tough one to appraise, but surely there is a competent and confident appraiser in your market that has the intestinal fortitude to tackle this one. Nothing you stated in your post is impossible to address properly in an appraisal.

 

[Steve Owen]

No one mentioned this (I wonder why not) but you should tell your story to your state appraisal board or commission. I don't know about Ohio, but they may be part of your state's department of economic development. You may be able to find them on the web (a starting place is https://www.appraisalfoundation.org/html/in...ate_real_estate ). It was the appraiser who cancelled the order, not you. At the very least, this appraiser is guilty of an ethics violation and should refund all of your money.

 

[Anonymous]

Tell the lender that you are not satisfied with the appraiser they chose, ask them to assign a competant appraiser to the case. Perhaps the property isn't worth what you have contracted to pay for it.

I would also order a home inspection and provide it to the appraiser, it will cost you a small amount of money now but it may save you thousands.

The first appraiser should refund all of your money since the assignment was not completed. Small claims courts were invented for this sort of case.

 

[lanetim]

Well, I've been appraising for a few years here in Ohio and what I hear from you is about what I would expect. First about the basement. True, many homes around here have water in the basement. But, many banks get VERY UPSET about this sort of stuff. Although the government says that it is okay to lend on the property, the banks don't really care what the Gov. says at all. My exp. says that banks don't give a dam about they can really do, or not do. They ALL make up their own rules and say to hell with anyone elses. It is sad for you, and more than frustraiting for appraisers who have to work with 800 different banks who all want something done differently. About the broker....This is just typical of brokers frankly!! They make money off of how much you finance. They tend to believe that if they can get a higher appraisal, they can convence you to borrow more, hence making more. Most brokers in appraisers eyes are the very lowest form of life that exist. They will lie, cheat, steal, and do anything they can to screw anyone, if it helps their wallet. Not all, but most, truely are VERY VERY bad people. So the appraiser is more than likely under alot of pressure to "GET THE VALUE" the broker wants. Understand the appraiser is in a difficult position, if she doesn't make the broker happy, she doesn't get any biz. and if she does make him happy, she will more than likely end up in jail if the state ever found out. We are in difficult positions. And if the bank says that they refuse to lend on a home with water in the basement, then the broker will tell the appraiser to "Not mention that, pretend you didn't see it!", by law, she has to mention it. It is a large catch 22!! Now as for not giving all the money back, that is normal. Even if you hadn't paid for the appraisal at the door, she would have charged for going out to the home and doing the inspection and all the research that came about after she left the home. Some appraisers call this a "trip charge", or a "research and inspection fee" typically this is around 100.00. Try not to get to upset with the appraiser, believe me, we want to make the deal work as bad as anyone else, but we are the only ones who can lose our jobs for our entire lifetime and go to jail for many years if we don't follow the law. The brokers for all practical reasonings are without worry of going to jail for being less that truthfull. They can. but it RARELY happens. This is something we all hate about our job, and have to explain all the time. The bright side is that as of May 2, 2002 the brokers are starting to get some laws against them and how they work. It won't make a big difference for a little while, but finually the appraisers are starting to get some hope that we have not left to wolves until the end of time. Instead of getting upset with the appraiser, take a critical look at the broker!! Believe me, most of them truely are the biggest crookes, and the worst type of person on earth. They lie as if it is second nature, and screwing people almost makes them sleep better at night. Just be carefull! Few brokers, I only know 2 or 3 in the entire state; are worth a dam at all. The rest will get your money and run. Good luck!!

 

[lanetim]

Tell the lender that you are not satisfied with the appraiser they chose, ask them to assign a competant appraiser to the case. Perhaps the property isn't worth what you have contracted to pay for it.

I would also order a home inspection and provide it to the appraiser, it will cost you a small amount of money now but it may save you thousands.

The first appraiser should refund all of your money since the assignment was not completed. Small claims courts were invented for this sort of case.

I can't believe you would say this. You must not be involved in the biz. USPAP (the set of laws we have to follow or else we end up in jail without a job) clearly states that compensation based on a predetermined value is illegal. The appraiser has every right charge, we don't work for free. Work is done often enough for free as it is!! Truthfully, the appraiser should have finished the report and got it to the broker without requard to value, that is what is completely expected of us appraisers based upon USPAP. And she shouldn't have called the broker to tell them first, that was done out of politeness, she shouldn't have done that. She can lose her lic. here in Ohio for for not finishing it based upon a value. She didn't have to send any of the money back. You must be a broker.