Quick question, for which I am pretty sure there is a variable of answers. We are purchasing a foreclosure home and are asking the bank for 180k. They did an exterior only appraisal which came back with a value of 237k.
Now, we have several issues with this, especially considering the comps used were for homes nearly half the size, but we will ignore that for now. The bank has now ordered a full walk-through appraisal due to their new “awareness” that this is a vacant home.
So, since the original appraisal value was lower than it most likely should be, we are worried the value will go down to below the 180k benchmark to still qualify for the loan since the home is in somewhat disrepair due to being a foreclosure (we have 20% down).
Can the value of an appraisal go DOWN after an initial exterior appraisal, or only stay the same/ go up? Is there anything we need to worry about?
If they find problems during a walk-thru, of course the appraisal can go down. This can often be the case with abandoned houses - - who knows what happened in there?
Actually, if things aren’t to their liking, they can back out altogether.
I had a sewer line back up (Thanks Big Tree In Front Yard!) and ERA mortgage ran away screaming from my business, since their inspector saw it.
I’d locked in an APR and everything… they just backed out.
That sewer line back-up cost me 50 basis points, because rates shifted…
That’s the thing - there is nothing hugely wrong with the house, even for being a foreclosure. Obviously there are cosmetic issues, such as light fixtures missing (the wires are capped), dirty walls, stained carpet, and the most major thing being that the kitchen has no cabinets, so I’m sure we will be knocked down for that…
This whole thing came up because of a missing heater, which lead them to not close the loan on time and order the reappraisal. We have remedied that issue. We also have done their water test, which came back clean.
It seems to me the only thing holding this up now is the price appraisal meeting their needs, which still has me concerned for the reasons mentioned. Are there any other significant issues an appraiser can note that can lead them to not closing??
This seems to just be one of those things where we will just have to wait and see. Hopefully since it was a bank appraisal trying to meet a contract price the first time around, they will do the same for this second appraisal!
The bank was going to accept a drive-by appraisal on a foreclosure? That’s pretty stupid for the bank. How come they weren’t aware it was vacant in the first place?
On the off chance it comes up too low, try and get a HUD 203K loan instead. That will include money for repairs such as the cabinets.
Until you have a signed contract, you don’t have a signed contract.
And when you don’t have a signed contract, either party can do damn near anything they want. including walk away.
This is true in every business situation. Expectations or hopes or intents to sign are just that: expressions today of what somebody might do tomorrow. In certain times, mights can often be pretty certain. In uncertain times, less so.
Well, that is a fantastic question which we are trying to get answered ourselves. It was painfully obvious that this was a foreclosure from the get-go, as it was stated to the lender before we were even pre-approved. Not to mention, it is clearly obvious because the contract is between us and a selling BANK, and is AS-IS condition. In fact, the first appraisal they had done was a desktop appraisal, which had to be redone. They dropped the ball big time, and they are fully aware. Not that it does us much good
We’ve already missed our closing date (10/17), so now we just want this loan to be signed off instead of scrambling to find another. The home is 3,850 sq ft in 5 acres in an area where those types of homes typically sell for well over 300k. This is why we are concerned, because the exterior came back low - which we are hoping is just so that it met the contract price. We cannot imagine it would go below 180k, but I guess we do not know!
Just remember that any appraisal is a SWAG (Scientific Wild Assed Guess) and you will understand the game.
As others have said, it can go up, down or the loan offer can be completely revoked.
Watch some of those Flip Your Home shows for examples. At the end, the real estate apprasiers say, “Your home is now worth $250K”. And then the closing crawl says it’s been on the market for 78 weeks with no offers over $150K.
