Problem with closing

9 Replies

I am having a nightmare on a flip i'm in the middle of. First i have had 4 extensions to the contract. I know it's my decision to sign each one but i feel i'm under sellers mercy. It's an FHA loan and i am in Nashville where the market is slammed right now. Now at the day of closing the underwriter has requested a second appraisal. I just went through the same situation where a second appraisal was done and came in at 20,000 below the first. I have put a lot of money and time in this flip. Where is the justice for the seller. I am going on 60 days for this closing. The first 3 extensions were because the back log in Nashville and the 4th was because they decided at the day of closing to get a second appraisal.

@Tony Hibbs

Stop signing extensions and move on. And this is one of the reasons I stopped considering FHA / VA / USDA offers on my flips back in 2009...government insured loans are just too much of a pain to deal with...so I don't. It's cash or conventional.

My understanding is because it has not been on the market for 180 days. Here's my problem with this whole mess. I bought the house for $35,000 and am selling for $92,000  It was on the market for $89.900 and i received an offer for $87,000 and i pay $5000 for buyers closing. I countered the offer and had the $5000 added to the final price. I had put a lot of hard work and money in this flip. If the underwriters would have just had me list my remodeling costs and shown the before and afters, they would have seen why the difference  in value. The first appraisal came in fine. Now i'm having to sign another extension so they can order another appraisal. I could just say screw it and try to sell as cash or conventional,but to what additional cost.

Because "it has not been on the market for 180 days" is some made up crap.  Almost no properties are on the market for 180 days before selling.  Something smells.

@Tony Hibbs

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Tony,

Has the lender shared this information with you or just the buyers agent? If it is the buyers' agent I would call the lender and gather as much information regarding the matter. FHA loans have a 90 day seasoning period and the 180 day issue seems a little far fetched to me.

    In the case you allow them to have a second appraisal, I recommend meeting the appraiser at the property, and providing them with a detailed list of repairs and costs. In  addition to any additional comps that might help your case. A well put together packet of information will be welcomed by the next appraiser. 

Hope it all works out. Cheers!

Stuart

Thanks for the messages in reply. I am just going to have to wait this one out and use different tactics next time. Another lesson for anyone that get's in my position, don't let the buyer move in without the deal being closed. Was supposed to close last Friday and the buyer had delivery of his furniture scheduled for that day. I got a call from his mortgage guy saying that the deal was passed from a junior underwriter to the senior underwriter and he didn't for see any problems and we should close the following Monday. Monday came and that's when they decided to get a second appraisal. Now it's Friday and still waiting for second appraisal report. My saving grace in this is that i did sign an early occupancy form and he is paying $40 per day extra till it does close.

Originally posted by @Tony Hibbs :

I am having a nightmare on a flip i'm in the middle of. First i have had 4 extensions to the contract... I just went through the same situation where a second appraisal was done and came in at 20,000 below the first...

 How did you finance the flip? Do you feel they are just trying to increase your holding cost -- squeeze some of the profits? Also, on the deal where the lender appraisal was $20,000 below initial appraisal, did they require you adjust the sales price downward or did you just walk away from the deal?

It was a cash deal on the first time the lender asked for a second appraisal. There are a couple of variables. One is that the Nashville market is changing almost to fast for it's own good , and another is at the end of closing i was broke and had no choice on my end but to take the loss. My realtor had appealed the second appraisal, but the lender refused to negotiate.  The first appraisal came in at $149.000 and the second came in at $129.000 

Originally posted by @Tony Hibbs :

It was a cash deal on the first time the lender asked for a second appraisal. There are a couple of variables. One is that the Nashville market is changing almost to fast for it's own good , and another is at the end of closing i was broke and had no choice on my end but to take the loss. My realtor had appealed the second appraisal, but the lender refused to negotiate.  The first appraisal came in at $149.000 and the second came in at $129.000 

 A variance of $20,000 in the value of the property is quite a bit of difference for a property in the mid $100,000 range.