Nothing to compare to?

[Richard Carlsen]

In addition, in rural market with "nothing to compare it to", the Cost Approach takes on serious validity. If, in fact there is nothing to use as a comp, the loan can be made based on an opinion of Value that relies on the Cost Approach, regardless of what the UW says.

Be assertive with them.

 

[Lisa Dibert]

Thanks for your feedback on this. We've decided to go elsewhere and found a good mortgage broker who assures us that we will get this through. We will be closing our account at that credit union though. What good is membership for years if they are going to turn their back so easily? The mortgage broker said there were several options including looking at the tax value...although that's probably lower. He said we'd cross that bridge when we get there. We feel pretty good about this one.

 

[MARKETVALUE]

My .02 (did you ever notice this is not a 'cents' on your key board?)

I dont think this is a redlining issue. And I do think it is possible that most money lenders dont want to touch this deal.

Its a purple dinosaur issue. Cost approach if applied by someone who actually studys the book would be the best indicator of value here. Chances of finding a victorian duplex without using historical sales from the victorian brothel era are slim to none. Its possible there arent comparables, but its gotta be worth somethin'

I dont understand where some of you are comming from with the 'they cant turn you down' angle. Please explain more. It sounds to me that their money WONT be secure. What in the hell could they get for this thing if they foreclose next month? Why does an investor want this paper in his portfolio? Then again if you are not male, not caucasian, and spend more money on lottery tickets and cigarettes in a week then you invested last year, then I'm sure our government can fit you into a 100% program somewhere and then fine the appraiser when they foreclose.

Throwing out the redline issue, can someone explain to me why you think someone has to lend money???????

MRM

 

[Verne Hebert]

Don't axe the credit union. They may have great rates for consumer loans.....and things change every day.

It is a duplex. It is all about the income stream. And there has to be rent income numbers around.

My tenants don't seem to care, really, whether they are have hardwood floors or its a victorian. How's the condition, how many bedrooms and baths, how much is the rent?

 

[Lisa Dibert]

Ok, this is where things stand. We found a mortgage broker that said that we could get this deal done. Not to worry. He said that we could do things to make the appraisals work outside of the normal comps. Now, we hit the snag! Apparantly there are no certified appraisers in the area that want to do the appraisal! They said that they would have to use a house valued down around $40,000 and we need $131,000 and it wouldn't be fair to us for them to do the appraisal, charge us for it, and not have it work. This house is worth the price! In fact, its a steal!

Its a duplex...two complete houses! Its not a house that was turned into a duplex but one that was built that way. Each side mirroring the other. There are single homes that are selling on the market for $128,000 and each one of our sides could match up to those single homes (not to mention the bigger lot size).

Our plan is to live in one side and rent the other. Is there any way for us to approach this better? We really would hate to walk away from this...we have a lot of time and money invested in this property already (not to mention the blood, sweat and tears). The stress from the lack of appraisal is causing some emotional damage here.

Please please help us.

 

[JM2187]

Are there other two family homes in the market selling in that price range? Generally single family homes can't be compared to multi-unit income properties. Is it a rental market?

Based on what you've posted it sounds like you do have a very nice property, however it also sounds like it's a very unique property that in that area would appeal to only a very select group of buyers. As such, as the lender will be forced to sell this property in the event of a foreclosure, if it is so unique that marketing would be an issue, this may explain a lot. The fact that appraisers are unwilling to approach this suggests the same, as the appraiser has a similar problem, value support based on confirmable similar sales and income data. Few, if any lenders are willing to accept an opinion of value based only on cost.

What is the basis of your personal opinion of value?

Joe

 

[Lisa Dibert]

is based on what I see other properties selling for in the area.

I just talked on the phone with an appraiser...he's having the same problem with another house because of the high value in an area that really hasn't been selling much lately. We are going to try to find a local bank that is willing to keep the mortgage in house and see where we can go from there. Its our last chance.

 

[EDWARD BERRY]

If you are going to live in one side, FHA is the best way to go.(at least in NW Ark.) the guide lines are written in plain English and if you qualify and the property qualifies (with repairs if necessary)they have to make the loan.

We have about 20 lenders and 75 appraisers who do this type all the time.

Hopefully yours-ed

 

[FrankA]

Marketvalue is right, when he says it is not a redlining issue. Also, the cost approach proves absolutely nothing on it's own as an indicator of value, I take that back, it shows the highest possible price that a prudent person would pay for something, BUT it does not demonstrate that anyone WOULD pay anything, even $1.00 for the property.

Due to the lack of sale information, marketability, or the possible lack thereof is the issue. What does this mean, it means increased risk to the lender.

Increased risk to the lender means increased cost to you to cover that risk in the form of tighter credit restrictions, as in lower LTV, higher interest rate, shorter term loan, non-fixed rate loan etc, your credit rating needing to be higher etc.

All of these things have absolutely nothing to do with being discriminated against, redling etc. And NO, the financial institution does not have to loan you or anyone else money when the collateral's value cannot be established to a reasonable degree and that is the central crux of the problem. Just becasue Cost Approach Apprasier A says that the property is worth X, does not mean the financial institution must accept that and therefore loan you money anymore than you have to accept a doctors opinion. You may seek a second opinion from what you percieve to be a more competent doctor before proceeding and so may the financial institution.

What it boils down to is that more than likely you are going to have to accept and adjustable rate loan, with a shorter term, or ballon payment at a higher rate than if you were trying to borrow money based on a more typical property who's value could be established witha greater degree of certainty. Just because Mr mortgage hound who screams on TV says rates as low as X, blah blah blah, does not mean this applies to you or your property anymore than 0% interest on Brand X new car applies to the rate and terms you'll pay when buying a 1979 used car.

Find a lender that loans on non-conforming properties and start there. It will save you time and money.

 

[MARKETVALUE]

Having a chance to review this topic and its replys. I still stand by may statements regarding nobody has to loan anybody anything.

But, as mentioned somewhere above, the income approach should be the most applicable approach to value.

Get your tenants lined up with leases in hand and you may find a lender.

MRM