Non Appraiser - VA Loan Appraisal vs Personal Appraisa

[jacktrack]

Hi All - I need help.

First off - I sell via FSBO. I order an appraisal before putting a house on the market and offer a buyers agent commission. (third one here)

Put house in MLS in February 2009, ordered an appraisal, came in $375,000.

Didn't sell. 6 showings - 1 CD offer for full price (bad credit).

New offer in April 2010 for $345,000 VA.

Ordered a new appraisal (paid $375) in April 2010 before getting an offer, appraisal came in at $300,000. Told the buyers we were waiting on a new
appraisal.

Rural area - slow market for this price range - our comps include two foreclosures - all properties are within 10 miles of our house. They are 2 stories, older homes on small acreage. Comps range from a $525,000 lake home to a $155,000 foreclosure.

Our price per square footage came in at $120 - less than both the foreclosed property.

(1902, everything new within 5 - 7 years, subzero fridge, wolf range, marble & slate floors, 200 amp service, new plumbing etc., etc.)
I have been in one of the foreclosures - Active - listed at $325,000 - "Under market value" per listing agent.

It's a fixer upper - the big stuff plus outdated.

Our appraiser has 14 years experience so I asked her if her appraisal meant our house would not appraise out at $345,000 for VA.
She said, "Good for you. Whole new ballgame. For a VA Loan they will need their own appraisal."

Is it possible the VA is going to pull different comps? Where will he get them from? There are NO sales within our immediate area within the last 2 years. There are sales in surrounding towns but will he just pull the same comps?

I did find one comp from 2008 - really similar home, same year, within 10 miles, not updated, same acreage. Sold for $389,000 within 32 days. But this would seem to be an outdated comp?

I also heard that appraisers can and some will deduct 6% off the price of the home for realtor commission. True?

I don't want to waste the "buyers" time - how will it appraise out?

We can't sell at $300,000. In the last 8 years, we have invested $310,000 in material & pp, doesn't include labor nor the little things. Plus, I have actually been in the active properties - I know what is out there - I know our house is a good deal at $345,000. Also, the buyers have been looking at houses since November of 2009. They also know what is out there for the money.

Is it feasible that the market value dropped 20% since 2009? We had an appraisal in 2006 for a refi - appraised at $399,000.
Appraisal in 2009 was $375,000.
Appraisal in 2010 was $300,000.

Do I send the buyers off to the $325,000 foreclosure knowing they'll get financing and sit on the equity in our house?

Just don't want to waste anyones time. The "buyers" are under contract for the sale of their house.

If I tell them the appraisal came in at $300,000, they'll walk. If I don't tell them and wait for the VA Appraiser, I risk wasting time and I don't know if I can morally do that.

Any thought?
Thanks
JT

 

[Functional Obs]

Hi All - I need help.

First off - I sell via FSBO. I order an appraisal before putting a house on the market and offer a buyers agent commission. (third one here)

Put house in MLS in February 2009, ordered an appraisal, came in $375,000.

Didn't sell. 6 showings - 1 CD offer for full price (bad credit).

New offer in April 2010 for $345,000 VA.

Ordered a new appraisal (paid $375) in April 2010 before getting an offer, appraisal came in at $300,000. Told the buyers we were waiting on a new
appraisal.

Rural area - slow market for this price range - our comps include two foreclosures - all properties are within 10 miles of our house. They are 2 stories, older homes on small acreage. Comps range from a $525,000 lake home to a $155,000 foreclosure.

Our price per square footage came in at $120 - less than both the foreclosed property.

(1902, everything new within 5 - 7 years, subzero fridge, wolf range, marble & slate floors, 200 amp service, new plumbing etc., etc.)
I have been in one of the foreclosures - Active - listed at $325,000 - "Under market value" per listing agent.

It's a fixer upper - the big stuff plus outdated.

Our appraiser has 14 years experience so I asked her if her appraisal meant our house would not appraise out at $345,000 for VA.
She said, "Good for you. Whole new ballgame. For a VA Loan they will need their own appraisal."

Is it possible the VA is going to pull different comps? Where will he get them from? There are NO sales within our immediate area within the last 2 years. There are sales in surrounding towns but will he just pull the same comps?

I did find one comp from 2008 - really similar home, same year, within 10 miles, not updated, same acreage. Sold for $389,000 within 32 days. But this would seem to be an outdated comp?

I also heard that appraisers can and some will deduct 6% off the price of the home for realtor commission. True?

I don't want to waste the "buyers" time - how will it appraise out?

We can't sell at $300,000. In the last 8 years, we have invested $310,000 in material & pp, doesn't include labor nor the little things. Plus, I have actually been in the active properties - I know what is out there - I know our house is a good deal at $345,000. Also, the buyers have been looking at houses since November of 2009. They also know what is out there for the money.

Is it feasible that the market value dropped 20% since 2009? We had an appraisal in 2006 for a refi - appraised at $399,000.
Appraisal in 2009 was $375,000.
Appraisal in 2010 was $300,000.

Do I send the buyers off to the $325,000 foreclosure knowing they'll get financing and sit on the equity in our house?

Just don't want to waste anyones time. The "buyers" are under contract for the sale of their house.

If I tell them the appraisal came in at $300,000, they'll walk. If I don't tell them and wait for the VA Appraiser, I risk wasting time and I don't know if I can morally do that.

Any thought?
Thanks
JT

Hi JT,

From a non-appraiser side of things, good for you that you are offering the buyer's agent 3%. I cringe whenever I see a home on the market for over the typical listing period and it shows a 2% buyer's agent payout. I'm not an agent, but if I were, I probably wouldn't waste my time with such listings...

The appraisals you ordered, and the appraisal the VA will order, are opinions. They are opinions based on the market, but there is room for subjectivity. Don't worry about "wasting the buyer's time." Waste it ... get the VA appraisal. See what the VA appraiser's opinion is. It could surprise you.

As for comp selection, it's good that you understand some things, but don't reach beyond your capability. That is, you ask "where will he get the comps?" Maybe the appraiser knows something or will find something you or the other appraisers overlooked. I have often, well, at least sometimes if not often, found comps as a result of searching for things a different way. Sometimes agents make typos, or other mistakes, that cause things not to show up in a search. And there are other databases than just the MLS. Just let the VA appraiser do his job.

Moreover, if it comes in at $300,000, then you can decide what to do. You might decide that you could take $330,000. Or maybe you won't take a penny less than $345,000. Whatever it is, communicate it to the buyer with the new appraisal in hand.

Good luck

 

[Mike Garrett RAA]

Too many questions to answer in a simple post. I would suggest you call a local appraiser who can give you the name of an appraiser who does appraisals for the Department of Veterans Affairs IN YOUR MARKET. Call that appraiser and see if they will discuss your property with you.

The VA assigns appraisers from a rotation list; however, there might be only a few who would be servicing your area. You cannot get a VA appraisal on your own or can you get a VA appraisal until there is a contract on your property if you are offering it for sale.

The appraiser will have to decide what properties are comparable and can be used in the appraisal. A 2008 sale might be the only truly comparable property but the lender might reject the appraisal on the basis of that sale being too old and not meeting Fannie Mae guidelines. Foreclosed or REO properties might be the best available comparables in your case even though you believe they are vastly inferior to your property. Unfortunately, the market is the market and we can't make chicken soup out of chicken poop.

Best of luck,

A VA Appraiser

 

[jacktrack]

lol - can't make chicken soup outta chicken poop. Thanks for taking the time to answer. An appraiser we used told me a property is worth what a buyer is willing to pay and a seller is willing to sell for - within reason.

We are just going a head with the Purchase Agreement and VA Appraisal. Our numbers aren't too far apart - hopefully this appraiser will adjust for the condition of the properties - and not bog us down with too many work orders... lol

 

[Mike Garrett RAA]

Your appraiser friend is correct, a property is worth what someone is willing pay and what a seller is willing to accept. Unfortunately, that doesn't satisfiy the VA and they have specific guidelines and requirements which include using a minimum of 3 closed sales as proof of value. There in lies the rub...sometimes those sales do not support what a buyer and seller agree to.