No comps dilemma. Can you get a mortgage with only 1 comp?

Question

My son is trying to buy his first duplex using a 3.6% down FHA 30 year mortgage. He's going to live in half while he does some remodeling. His offer has been accepted and he has been pre approved for the mortgage. His problem is, the area where this duplex is has very few duplexes and the appraiser can only find one comparable sale. Our mortgage broker doesn't feel like the mortgage will fly without more comps. Any suggestions?

Chris Mason · Answer

Appraisal independence requirements put in place since Dodd-Frank are a thing. All the loan originator can do is pick the AMC (ideally a local outfit), order it, and see if someone is willing to take the order. Might be necessary to bid up the appraisal fee for someone to take it on.

Nothing you can do but go forward and hope for the best.

I'd hold off on other things that come with non-refundable fees (home inspection, etc) until that comes back.

The good news is that ANY buyer getting a mortgage will face this same issue, make sure your agent leverages that fact if the appraisal comes in low.

The other poster's suggestion to try to get the loan originators to "compete" based on who is willing to violate the law and risk theoretical prison time (unlikely and implausible, loss of license and end of career is more likely), while well intended, is a bit off mark.

Henri Meli · Answer

@Frank Jones  Last time I checked, Mortgage brokers don't do loans. Banks decide on loans. There is plenty of loan options out there. Always shop around. Is the current owner have a loan on the property? If so, which bank is he using? You can easily find it out online.

Good Luck

Bjorn Ahlblad · Answer

If there are no comps that's how it is. The appraiser should be able to do it without any comps at all. He/she can use a 'cost to build' method. Get a second broker involved and let them both know about each other. Maybe there is a local bank or CU in the same area as the duplex and you can get them involved.