Monday, March 07, 2005

Low Appraisals

Once again, due to an unexperienced appraiser a buyer will lose his house. The buyer had to cancel the moving van and now is in limbo with no place to go. The home he was purchasing was listed at $325 seller wanted more so both the listing agent and myself had to lower the commission in order for the buyer to get it at that price. The lender who is out of county orders the appraisal and as usual the appraiser is out of county and the appraisal comes in low....see it all the time. For the most part if the buyer wants the home he is going to have to pay above appraisal. Problem is that the buyer may be financing the majority of the loan and not putting 20-30% down. The comps actually show this home to be worth closer to $339. The home is in an area of new construction and a lot of "flips" so there is no "real exact" data but several pending sales which some appraisers refuse to use. Good one's do use them, or should I say educated, experienced appraisers use them. See we get these appraisers from Broward county to come down to Homestead and they think that PoDunk Homestead is still cheap farm land. So prior to leaving they already can not believe that a house could even sell in Homestead for over $200,000 because they are clueless.

Back to the buyer. This house sits on one of the largest lots in an area of new constructions where they are all very close together. This yard can take a pool which 90% of the lots can't. That there is valuable and will be in great demand when this purchaser sells. Sad thing is the purchaser is coming from a market that is slow he had his home up for sale since last October just getting an offer on it he was happy. He feels he is overpaying for the house and the Seller should reduce the price to $305,000, he is pretty emphatic about it. The seller laughs. The buyer will most likely let this home go and end up renting paying out $1600-$1900 a month to live in the same house costing him in upwards of $24,000 in one year's rent. This more than covers the difference in the appraisal. Word has it if the buyer can not get his lender to review the appraisal and work out the loan details, the owner is going to re-list at $339,000 why not? It is a great home, on a large lot and the next educated buyer will buy it.

What can I do, it's a sellers market... guess I will look up some rentals for him.

Update: Buyer and Seller were able to negotiate a remedy and Buyer is getting the home!


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