Banks refusing loan due to no Comps. Is this normal?

Question

I have contacted 3 banks that have refused to lend on a property because there are no comparable properties in the area and if the appraiser can't appraise it correctly, they can't lend.  I'm just curious if anyone has come across this and what did you do?  Outside of fund raising cash, are there different banks or loan products that I'm overlooking?

David Oldenburg · Answer

@Aaron Anderson  Yes, this is common and happens all the time.  A lender / bank must be able to sell their loan or justify to others why they did it.  This became a huge issue in the housing crisis between 2007 and 2010, when millions of homes went into default.  Each loan was gone over with a fine tooth comb, everyone trying to blame someone else for the loss.   There were many loans that had appraisal issues.   These days a lender would rather lose the loan, than do the loan with a value that is later found to be false.

Private money is about the only way you can do this type of property, but the downpayment, rates and expenses are much higher.

Darren Eady · Answer

It's like choosing a wife when you've only met one woman.  Maybe she's beautiful, kind and smart, but how would you really know?

Paul Sofia · Answer

I take it it must be in a rural area...When you say appraiser can't appraise it correctly, can you be a bit more specific?

Chris Mason · Answer

Start with the appraiser, not the bank.

Find an appraiser that can do it, likely charging some extra fee.

Ask which and lenders he often submits reports to. Those are lenders that you know ahead of time have an appraiser that can do it.

Aaron Anderson · Answer

The property is 1 tax Parcel, 2 mailing addresses, and the two"homes" are very different.  The front home is a 3/2 1300 sf with hardwood and tile throughout with central HVAC.  The back home is one big open room, no HVAC, but is has a kitchen and bathroom (so the lenders see it as a dwelling unit).  However, most duplexes are nearly identical in structure, these are totally different.

Banks refusing loan due to no Comps. Is this normal?

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