Investor · hampton, VA · Member since 2009 · 428 posts · 249 votes
We have a house that comps at $200k, and have a 3 month old appraisal that backs that price up. Our buyer just had an FHA appraisal that came in at $160k. We've tried to give the comps from the $200k appraisal to the new appraiser and he's only adjusting up another $5k. Can somebody please tell me how to handle these guys and perhaps get a value to the lender?
Kris Haskins , what's your agent saying?
Here's the problem with your deal, first, an appraisal back in October was more than likely using comps that sold during the summer months; typically a busier, more competitive, and higher prices time of year. Those comps are no longer valid, since appraisers will use comps in the last 90 days, if they're available. It's likely there are more recent comps that sold during the winter but at a lower price point.
Second, an FHA appraisal now sticks with a property for 6 months; meaning any other buyer using an FHA loan will have to use the same appraisal for their underwriting. This excludes a large number of buyers at that price point.
Finally, if you've rehabbed this property and owned it less than 180 days, your FHA buyers will have to get two appraisals, or one and a desk review, that give it value.
Your best bet, given the info, is to pull the property and re-list in a few months.
That flat out stinks. I have been in your shoes before. More than one. I always ate it but 40k is too much. All of my work in trying to get things turn around a on a light appraisal has fail. I am sure you have been told how an fha has a shelf life Let us know how that turns out.
Where did you get the 200k appraisal? Did you pay for it yourself? If so, the bank likely will not look at it, as it isn't independent. You could maybe see about financing the difference for the buyer, but the buyer will more than likely feel it is overpriced and will walk if you won't lower price.
Where did you get the 200k appraisal? Did you pay for it yourself? If so, the bank likely will not look at it, as it isn't independent. You could maybe see about financing the difference for the buyer, but the buyer will more than likely feel it is overpriced and will walk if you won't lower price.
Good luck.
thnx for chiming, actually no, we had a buyer that was going to closing a few months ago and the deal fell apart. That appraisal, the $200k, was for the 1st buyer back in October and it was completely independent.
Kris Haskins , what's your agent saying?
Here's the problem with your deal, first, an appraisal back in October was more than likely using comps that sold during the summer months; typically a busier, more competitive, and higher prices time of year. Those comps are no longer valid, since appraisers will use comps in the last 90 days, if they're available. It's likely there are more recent comps that sold during the winter but at a lower price point.
Second, an FHA appraisal now sticks with a property for 6 months; meaning any other buyer using an FHA loan will have to use the same appraisal for their underwriting. This excludes a large number of buyers at that price point.
Finally, if you've rehabbed this property and owned it less than 180 days, your FHA buyers will have to get two appraisals, or one and a desk review, that give it value.
Your best bet, given the info, is to pull the property and re-list in a few months.
Unless you can convert the buyers to some other loan type the FHA appraisal will follow you from one bank to the next. I have been told this but but never tried to have the buyer try a different bank. I think it sticks for 4 months.
believe it or not, we met the appraiser at the house, and for the 1st time, the appraiser looked UNDER THE HOUSE. Never had that before. We also gave him the comps we had.
Robert LaBrie , I thought it had changed but couldn't remember off the top of my head while watching tv, thanks for the correction.
Kris Haskins , appraisal guidelines are getting a lot tougher. Visualization of all attic and crawl spaces is coming down the pipe.
If you re-analyze the value using more recent comps, what value do you get?
I have a question for you on this topic. I remember asking where this FHA history is stored. How exactly would a bank even know about the old FHA appraisal, given a new FHA buyer, getting a new FHA appraisal. Is it a rule that is impractical to enforce?
Robert LaBrie , I'm not 100% sure but I'll call my appraiser tomorrow and ask.
All FHA loans have to go through the same UW process so I'm assuming there's a RMS somewhere that they must input all the info into and check against.
I'll find out for sure....
That FHA info is stored on a system called FHA Connection. All lenders use this system with FHA loans, and you are assigned case numbers. The appraisal sticks with the property. Another drawback is lets say a DE underwriter declines a borrower for FHA, and that borrower goes to another lender for a FHA loan, the new DE underwriter can see the previous DE's notes and likely will not approve them. Because it looks bad to override another DE.
Your best bet is to see if the buyer can qualify for other financing (there is a new 97% LTV Conventional product called HomeReady), or maybe your state has down payment assistance programs (i.e. here in IL we have a $7,500 DPA program through the state you can use with Conv financing depending on the area, purchase price, and household income).
@Kris Haskins If your market is as hot as mine then I would just pull the plug and put it back on the market and accept only conventional finance or cash offers...price it aggressively to attract more buyers.