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Sales Price Better Not Exceed Listed Price!

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Mike Simpson

Senior Member
Joined
Jan 30, 2002
A lender/client just informed us "HUD has a new policy that took effect August 1st--they will no longer insure loans in which the sales price exceeds the listing price."

Now I don't do much FHA, and I haven't visited their website (yet)...I was just wondering if anybody else has received similar feedback or has information regarding this matter?

I could understand HUD's unwillingness to insure some of these "no down payment assistance programs," but what about quick sale listings or agents just plain listing the property low (it happens!).

Thanks for your time,

-Mike
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Well, let's see. You take a $100,000 listing, add in buyer's assistance from the seller, that's $3000, add on top typical sellers required items, that's another $1500-2000, so the Sale price is now $105,000. Add to that the roll-ins, so the actual loan amount is $107,000 +/-. And they want to whine about sale price above list price?!

Roger
 

Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
Methinks your subject line is backwards......But the point is well taken - at least now we won't have to deal with them rolling in tons of closing costs to bump the contract price up and over the listing price - I'm so sick of seeing that crap.....
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
If true, looks like a detailed documentation of the listing history may be more significant than ever. Sure hope this is a trend.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I've been having a fun time writing up some comments for the past few months about this.

Here are some examples of what's been going in my reports lately. Enjoy and copy/paste/edit as you like. I can only hope that since most of these comments are from FHA appraisals, I might have had something to do with that new 'rule'.

"Some REO and investor activities are noted in this area along with seller concessions being added on to sale prices at times in order to pay buyers costs and/or down payments."

"The average list price to sale ratio is 90% - 105% depending upon motivations, pricing, and concessions added on to the sale price."

"Comp #1 had seller concessions that were added on to the sale price which was $2,100 above the listed price and was adjusted. Local Realtors do not disclose the concessions claiming confidentiality and all sales could have had seller concessions that are unknown to the appraiser."

"This is an area where there are many foreclosures and heavy investor activity. Foreclosures and investor activity make up the majority of the transactions in this market area."

"Extensive REO & investor activity makes qualified sales scarce. Almost all sales over $70,000 appear to have investors involved. The vast majority of Cash or Conventional Financing sales are REO properties sold to investors and the majority of the FHA and VA financed sales involve investor sellers."

"The total net exceeds FNMA guidelines. It appears that this property was purchased by an investor for $41,500 in 04/1999 and has been listed numerous times since with listings expiring and listed prices ranging from $67,900 to $74,900; sometimes having multiple active listings at different prices at the same time."

"Per listing Realtor, the seller rented this property to potential purchasers after building a new house. Those renters were not able to complete the purchase and this property was placed back on the open market again. This property was first listed in MLS on 10/09/2001 for $80,000, was rented and pending for almost a year, then back on the market for sale for $80,000 prior to the sale of $85,000."
 

Rich Hahn

Senior Member
Joined
May 2, 2003
Professional Status
General Public
State
Colorado
me only hopes it true.
Crafty Realidiotors will just find another way around it.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Rich, many already have.
If it's in a popular area, they "pocket" the listing (aka, withhold it from MLS).
And then the old withdraw/expired trick. Many MLS's will drop them after a certain period. Or better yet, some appraisers will not search the whole history, and miss the withdrawn/expired listing.
 

Dale Smalley

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
What a great law. now all they have to do is raise the list price. :huh:
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Dale,

As mentioned above, they're already doing that. At least we can point out the listing history and talk about how the original contract price was scratched out and replaced with a number a few thousand higher and, oh yeah, out of the goodness of his heart, the seller is contributing $3422 toward the poor buyer's closing costs. Hey! What a coincidence! That's the same amount the contract was increased by! Wow!

Of course, the crooks will continue to be crooks and those that want to do the right thing will still do the right thing. The world will still spin and some will sleep at night better than others. :asleep:
 
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