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Something Smells fishy

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William K

Senior Member
Joined
Sep 21, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
I performed an appraisal 2 months ago.
The property was A HUD foreclosure sale in a townhouse development. It was a FHA transaction and the end lender for the Mortgage banker required an appraisal even though it was a HUD property.
The subject property was exceptionally clean , no repairs, good sales data from within the development.
The accepted purchase price was in the $140s and the lowest sale which needed "decorating" was at $171K and all other sales were higher.

The property appraised higher than offer price.

Now the lender calls today and says they need the appraisal done again because the borrower backed out of the original deal and the listing agent re listed the property but lowered the asking price. The Fishy Smell is the old borrower then put in a new bid , this time in the mid $110s and got it accepted!
Anyone ever hear of this?
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I performed an appraisal 2 months ago.
The property was A HUD foreclosure sale in a townhouse development. It was a FHA transaction and the end lender for the Mortgage banker required an appraisal even though it was a HUD property.
The subject property was exceptionally clean , no repairs, good sales data from within the development.
The accepted purchase price was in the $140s and the lowest sale which needed "decorating" was at $171K and all other sales were higher.

The property appraised higher than offer price.

Now the lender calls today and says they need the appraisal done again because the borrower backed out of the original deal and the listing agent re listed the property but lowered the asking price. The Fishy Smell is the old borrower then put in a new bid , this time in the mid $110s and got it accepted!
Anyone ever hear of this?

I've not only heard of it, I'm seeing it all the time.

Did you base your appraisal solely on the 'closed sales'? Did you call to find about any concessions? Did you analyze and take into consideration the competitive listings and/or pending sales?

Perhaps the buyers have more of a feel of the market. After all, if they acted like most appraisers they'd never look at the competition. But that's not really the way the real market works, IMO.
 

CGgonnabee

Member
Joined
Apr 10, 2008
Professional Status
Certified General Appraiser
State
Virginia
My best guess...some folks have had "tea" together on several occasions....still having tea...will probably have tea again.

Politely analyzing the "fishy" situration.
 

William K

Senior Member
Joined
Sep 21, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
I've not only heard of it, I'm seeing it all the time.

Did you base your appraisal solely on the 'closed sales'? Did you call to find about any concessions? Did you analyze and take into consideration the competitive listings and/or pending sales?

Perhaps the buyers have more of a feel of the market. After all, if they acted like most appraisers they'd never look at the competition. But that's not really the way the real market works, IMO.

Thats the thing. all sales. all pendings , all listings, all are significantly higher than what they offered even the first time it was accepted.
I am just wondering if their is a game being played with the help of the list agent to get the property for well below what it is worth, because who would really catch it right now?

The subject is priced well below anything else in the development and the accepted offers were well below the list price both times.

And the biggest issue is the borrower backed out with out real cause according to the MBanker who was shocked they backed out at last minute saying "wasn't sure if his job was stable enough" to HUD, then when it was put on the market again at a lower price they get their bid accepted again!
It's as if know one looked and said, "hey your were the same one who bid last time and said you didn't think your job was stable enough so you wanted out. and we had it off the market for over 60 days , now you make a lower offer"?
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I love those phrases: "Below Marekt Value" and "Less than what it's worth".

If you have data all over the place, then what's it worth?
 

William K

Senior Member
Joined
Sep 21, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
It's already been appraised by me ( I know what it is worth) and by an appraiser for HUD when they listed it at over $170k.

A borrower submitted a bid for far less and it was accepted by HUD.

OK great they got a great deal , because even though HUD was told it was worth $170k+ they decided it was better to get something right now rather than wait. I get that! I get that happens even in bad and Good markets!

Sometimes someone just gets a good deal.

What is puzzling me is know one is asking or questioning
that a buyer who was approved, was clear to close , backs out of deal with a reason that "I don't know how stable my job is" is now having a second offer accepted by HUD for even less after they caused the property to not be marketed for 2 1/2 months?
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Maybe something about his job situation changed. It happens. But I agree it is a curious situation.
 

Greg Bell

Senior Member
Joined
Jul 7, 2006
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Louisiana
Typical Broker to Broker scam.Sell to a straw buyer (Uncle Louie) below market conditions , fix and sell.Someone is telling you a bed time story....
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
If it's a HUD foreclosure, it will not make sense... you are dealing with the Gobment. I've had many, many HUD deals fall through for one reason or an other, then HUD drops the price, and we get it under contract again a month later for 10-12,000 less. Not uncommon at all... your tax money at work. :)
 
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