need help please.

[knopf]

Recently signed a contract on a home. Stated to be 2750 sq ft custom built, two car attached, 36' x 24' detached work shop, and 11 years old.

Selling price is $315,000. Based this amount on owners market analysis, real estate agents opinion who would be listing my current house and the mortgage person (brothers mother-in-law) who was handling my loan. I took the house plans and measured the square footage at a little over 2700 sq ft.

Mortage agent wrote up my contract $315,000 selling price. $100,000 down payment. $1000 earnest money. Contingent on aquiring loan and meeting appraisal.

This is where it gets interesting. On the day of appraisal I get a call from the mortgage agent informing me that appraiser is on location and has called her to tell her it won't appraise for selling price. His estimate is $270,000 on 2510 sq ft. She tells me she has "stopped him" and recommends another appraisal/appraiser. I am told I will only owe him $100 for going out to the house.

On the second day, I get a call telling me that the second appraiser has measured the house at 2532 sq ft (218 short) but has appraised it at the exact selling price of $315,000 which is a whopping $124 per sq ft exceeding anything in our market I have seen. His comps are two and three year homes in much more expensive neighborhood and even they sold for below $110 per sq ft. Has he just "hit the number"?

I asked my mortgage person to request the first appraiser to finish his appraisal to help me determine the actual value of the house.
She calls me back and says the first appraiser doesn't want to finish his appraisal and "butt heads" with anybody. Says I no longer owe him the $100. She recommends a third appraiser who can perform the "second appraisal"

At the last minute (now fearing a second high appraisal) I asked her for the original appraisers phone number to call him and see why he won't finish his appraisal. She gives it to me but says she needs to call him first. Three minutes later she calls me to say he will finish the appraisal.

What is going on ?

This is the second home I have bought in 20 years. I know I have made some mistakes but I tried to do my homework. I have asked for advice from people I should be able to trust. I will be paying for both appraisals.

Should I try to renegotiate based on the drop in square footage?

If the deal falls through are the owners entitled to the earnest money based on appraisals?

Can I get a review of the high appraisal?

Thanks for reading and any help you can give.

knopf

 

[Michigan CG]

....... a little over 2700 sq ft.......

.......it won't appraise for selling price. His estimate is $270,000 on 2510 sq ft. She tells me she has "stopped him" and recommends another appraisal/appraiser. Is this the Realtor representing YOU? She/he stops the appraiser because he isn't meeting value??? AND THEN recommends another appraiser???? So your realtor is going to try to find someone to meet value???I am told I will only owe him $100 for going out to the house.

On the second day, I get a call telling me that the second appraiser has measured the house at 2532 sq ft (218 short) but has appraised it at the exact selling price of $315,000 which is a whopping $124 per sq ft exceeding anything in our market I have seen. His comps are two and three year homes in much more expensive neighborhood and even they sold for below $110 per sq ft. Has he just "hit the number"? Nice, so the realtor and MB found someone to hit the number...do you feel better? I would guess not.

I asked my mortgage person to request the first appraiser to finish his appraisal to help me determine the actual value of the house.
She calls me back and says the first appraiser doesn't want to finish his appraisal and "butt heads" with anybody. Says I no longer owe him the $100. She recommends a third appraiser who can perform the "second appraisal" Maybe the MB paid the trip charge of $100 and found the second appraiser so she could get her huge commission on closing your loan; $100 is a pittance to give up to get a loan closed.

At the last minute (now fearing a second high appraisal) I asked her for the original appraisers phone number to call him and see why he won't finish his appraisal. She gives it to me but says she needs to call him first. Three minutes later she calls me to say he will finish the appraisal.

What is going on ? My first reaction would be a first appraiser who is honest, a second appraiser who is a number hitter and a Realtor and MB who want to make commissions. Of course that is only my opinion based on what information you have supplied.

This is the second home I have bought in 20 years. I know I have made some mistakes but I tried to do my homework. You have done your homework well, and should be applauded.I have asked for advice from people I should be able to trust. I will be paying for both appraisals. And you are entitled to both of them. Get copies of both of them, and if the number hitter one is garbage find a third appraiser to review and get it turned into the state. There are too many appraisers who hit numbers fraudulently.
.....................

knopf

I wish all home buyers were as diligent as you. Good luck. You will get more advice from some very good appraisers on this forum.

 

[knopf]

Thank you Timothy - to clarify

"she" is the mortgage broker - she has made all contacts with appraisers and has advised me on each appraisal. No real estate agent is involved with a commission. I think your assessment is dead on concerning the Morgage Broker.

 

[vargasteve]

There is always a story in every career field that are embarrassing when you hear them. I would personally speak with the appraisers and see what & how much they appear to know. I really would like to have a piece of the 1st appraisers mind if I were you.

There are a few prudent buyer steps is to consider:

1) driving the actual comparables utilized to familiarize yourself with the findings
2) have your realtor provide you with full disclosure of available sales in the neighborhood within say the last 6 months. When you see the comparables not used you know if something is really 'good' or misleading.
3) study the appraisal & comparables NOT utilized for perspective


Most appraisers will 'come in' at the sales price (including myself), unless the data is strongly suggesting that the property is worth more, or less than the sales price. No sense cutting the value when your case is not compeling / convincing. Some attention is given towards the sales signed contract, its only prudent to consider a "live & living offer". About the same amount of percentage I don't come in at the SP, I appraise for OVER the sales price (it's actually very common in this market where in my area below market sales are happending)

I'd say that one who turns down work by letting you know up front is walking away from $ because lazy for some reason, or very ethical. If ethical, in addition to protecting you he/she is just being courteous since $ is not the primary issue. However either could be true. For an appraiser it is a tough road, turn down work = very often loosing customers, not come in at 'sales prices' = very often loosing customers.

In California (and most states) there are three experience levels of appraisers, trainee, then licensed, and then certified appraiser or review appraiser. In addition, there are certifications one can get the most prestigious of which is the SRA, and MAI.

The most sophisticated consumers of 'quality' appraisal work are relocation companies. I highly recommend at a minimum a certified appraiser, and if possible SRA / MAI ( www.appraisalinstitute.org) and or a relocation appraiser ERC ( http://www.worldwideerc.org/directory/us_appraiser2a.shtml

 

[TJSum]

Your mortgage broker has already demonstrated they are not looking out for your best interest. Shop around before committing yourself, they might not be giving you the best loan available as well. You have no obligation to this company after what they just tried to pull on you.

 

[Mztk1]

I get a call from the mortgage agent informing me that appraiser is on location and has called her to tell her it won't appraise for selling price. His estimate is $270,000 on 2510 sq ft. She tells me she has "stopped him" and recommends another appraisal/appraiser. I am told I will only owe him $100 for going out to the house.

I know she is your brother's wife's mother, but that was the first warning. The broker is prone to appraiser shop which tells you something about her business ethics. Especially when she is shopping a higher value for a relative. She should be thankful she has an honest appraiser who will save you from overpaying.

On the second day, I get a call telling me that the second appraiser has measured the house at 2532 sq ft (218 short) but has appraised it at the exact selling price of $315,000 which is a whopping $124 per sq ft exceeding anything in our market I have seen. His comps are two and three year homes in much more expensive neighborhood and even they sold for below $110 per sq ft. Has he just "hit the number"?

This guy sounds like a number hitter to me. On the boards they call him "Skippy".

I asked my mortgage person to request the first appraiser to finish his appraisal to help me determine the actual value of the house.
She calls me back and says the first appraiser doesn't want to finish his appraisal and "butt heads" with anybody. Says I no longer owe him the $100. She recommends a third appraiser who can perform the "second appraisal"

hmmmm.

At the last minute (now fearing a second high appraisal) I asked her for the original appraisers phone number to call him and see why he won't finish his appraisal. She gives it to me but says she needs to call him first. Three minutes later she calls me to say he will finish the appraisal.

Double hmmm

What is going on ?

Fishy. Look there are lots of places a mortgage broker can burn you and think they are really just doing their job and getting paid for it. It sounds like your MB is either poorly trained or not trustworthy. If you can do it gracefully, it is time to look for a new loan officer. Go to a local bank and deal direct.

Should I try to renegotiate based on the drop in square footage?

You can probably get out of the contract if the house was not as advertised. You can try to negotiate if you really like the house.

If the deal falls through are the owners entitled to the earnest money based on appraisals?

Did you make the deal contingent on the property appraising? It is possible that the fault in advertising of the living area will give you recourse, but I don't know the law in Alabama.

Can I get a review of the high appraisal?

Why would you want to? You already know he went out of the area to superior neighborhoods in order to hit the number. That's an old trick. My advise is, it is better to lose $1,000 than be upside down $45,000 as soon as you move in. When an appraiser comes in low on a sale, trust me, he has looked under every rock and inside every crevice to see if he is missing something. He also knows the report is going to be overly scrutinized and that a Skippy lurks nearby just waiting to make him look bad. If the first appraiser is coming in low by that much, I'd wager the $1,000 and back out.

Thanks for reading and any help you can give.

knopf

Thanks for writing, it passes the time nicely.

 

[Smokey Bear]

Sorry, but the first appraiser is just as bad as the second one. Stopping an appraisal at inspection because you don't think it will "hit value" IS an appraisal, and one that is not yet supported by the research. Stopping the appraisal for value purposes is NOT an acceptable practice, he/she should have finished the appraisal that was ordered. Their job is not to hit value, it's to appraise the property.

It's time to pony up and find your OWN appraiser, to find out what the property is really worth. It's obvious that everyone else involved in this transaction has only their own interests at heart, and are willing to screw you to get their commission.

 

[TEL2002]

Do you really want this house??????????

If so.........

Tell your MB that you are backing out of the deal.

Go hire your own appraiser and have them give you an honest appraisal for your own personal info. If the appraisal is what you like then......

Renegoiate with the seller. If they will not budge on price, back out of the deal based upon the honest appraisal you have.

Go to a local bank for your loan.

When your gut tells you it is wrong...it probably is.

 

[CURT VAN HOOSER]

There is always a story in every career field that are embarrassing when you hear them. I would personally speak with the appraisers and see what & how much they appear to know. I really would like to have a piece of the 1st appraisers mind if I were you.

There are a few prudent buyer steps is to consider:

1) driving the actual comparables utilized to familiarize yourself with the findings
2) have your realtor provide you with full disclosure of available sales in the neighborhood within say the last 6 months. When you see the comparables not used you know if something is really 'good' or misleading.
3) study the appraisal & comparables NOT utilized for perspective


Most appraisers will 'come in' at the sales price (including myself), unless the data is strongly suggesting that the property is worth more, or less than the sales price. No sense cutting the value when your case is not compeling / convincing. Some attention is given towards the sales signed contract, its only prudent to consider a "live & living offer". About the same amount of percentage I don't come in at the SP, I appraise for OVER the sales price (it's actually very common in this market where in my area below market sales are happending)

I'd say that one who turns down work by letting you know up front is walking away from $ because lazy for some reason, or very ethical. If ethical, in addition to protecting you he/she is just being courteous since $ is not the primary issue. However either could be true. For an appraiser it is a tough road, turn down work = very often loosing customers, not come in at 'sales prices' = very often loosing customers.

In California (and most states) there are three experience levels of appraisers, trainee, then licensed, and then certified appraiser or review appraiser. In addition, there are certifications one can get the most prestigious of which is the SRA, and MAI.

The most sophisticated consumers of 'quality' appraisal work are relocation companies. I highly recommend at a minimum a certified appraiser, and if possible SRA / MAI ( www.appraisalinstitute.org) and or a relocation appraiser ERC ( http://www.worldwideerc.org/directory/us_appraiser2a.shtml

I would be interesting in learning the license level of the appraisers involved. That said, just because someone holds a 'license" level does not mean they are any less qualified, less educated, or less experienced than someone with a "certified" level. By the same token, just because someone holds a "certified" level does not mean they are more qualified, better educated, or more experienced than someone holding a "licensed" level. On behalf of licensed appraisers everywhere, I'd like to thank you, vargasteve, for the vote of confidence.

 

[Hamlet]

I would be interesting in learning the license level of the appraisers involved. That said, just because someone holds a 'license" level does not mean they are any less qualified, less educated, or less experienced than someone with a "certified" level. By the same token, just because someone holds a "certified" level does not mean they are more qualified, better educated, or more experienced than someone holding a "licensed" level. On behalf of licensed appraisers everywhere, I'd like to thank you, vargasteve, for the vote of confidence.

I agree, especially now with the recent influx of appraisers to get "certified" before the licensing requirements increased and the test changed.

Talking to the appraiser before engaging their services is the best way to determine if they are qualified to do the appraisal you need.