Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
Hello, we were suppose to close today at 3pm and at 2:45pm we get a email from the mortgage broker saying that since this is a flip transaction and I have not owned the house for over 12 months they want to do a second appraisal? What kind of customer service is this? Why at the last second? I've owned the house for 9 months and still need a second appraisal? Has anyone heard of this? Thank you.
Welcome to dealing with Banks and real estate these days. I had the same thing happen in regard to seasoning. One minute they say one thing and the next it's different. If you want to get the deal done, and most the time you HAVE to get the deal done, you just have to jump through the hoops.
Welcome to dealing with Banks and real estate these days. I had the same thing happen in regard to seasoning. One minute they say one thing and the next it's different. If you want to get the deal done, and most the time you HAVE to get the deal done, you just have to jump through the hoops.
Assuming this is an FHA deal, it's up the underwriter if they want to require more than one appraisal during the 12 months after the purchase. And it's VERY common that they do.
Sounds like the underwriter your broker is working with isn't very familiar with the flip rules and only realized this issue towards the end of the underwriting process, which obviously is going to impact the closing.
My suggestion is that for future transaction, you find a good mortgage broker who works closely with their underwriters and who can discuss these issues before the underwriting process even starts. Had the underwriter been asked about whether two appraisals were to be needed, she could have investigated and made the decision much earlier in the process. A good mortgage broker wouldn't have left this up to chance with the underwriter.
And just wait, if the buyer paid the first appr. you will be asked to pay the second the buyer can not be charged for both and no one else will pay, just close and this is the lack of knowllege of the mortgage broker.
And just wait, if the buyer paid the first appr. you will be asked to pay the second the buyer can not be charged for both and no one else will pay, just close and this is the lack of knowllege of the mortgage broker.
Edgar is right, you will have to foot the bill for the second appraisal as the buyer can only pay for one. I would hold my agent responsible for this and take it out of their commission pay-out as they should have been on top of the buyers agents and their lender to make sure everything that was needed was done prior to clsoing day.
I just did one of these this month and the lender paid for the second appraisal. In fact, I thought it was against FHA rules to allow the seller to pay.
I just did one of these this month and the lender paid for the second appraisal. In fact, I thought it was against FHA rules to allow the seller to pay.
It's not against the rule (at least not FHA) for the seller to pay for an appraisal. In fact, for any of my buyers who use my broker, I'll pay for BOTH appraisals. I've paid for dozens of appraisals for my buyers...
That said, as the seller, you have every right to refuse to pay. If you do refuse, it's up to the agents and the broker to decide if they'll pony up the cash or risk losing the deal.
I've actually wondered what would happen if everyone refused to pay for the second appraisal (and the buyer wasn't allowed to)? I guess it would be considered that the buyer was "unable to obtain financing" and whatever contractual actions are associated with that...
You are probably fortunate that is all they did. As a builder who sells new homes, our typical escrows are taking 90 days now, and you can't trust the escrow officer and lender to work quickly and closely together on anything anymore. I think they are burnt out on all the regulation. I have to follow up with both of them to make sure they are communicating with each other by the hour. We are really dealing with the government now in every closing, and I should not have to waste my time in this area, but it would take 180 days if I did not have to micro-manage every detail.
I might be venting a little, and sorry about that, but the good old 30 days closings are gone forever.
Since we fund a lot of flips, I see it all the time. The seller lets me know (almost always at the 11th hour) that the closing is delayed for a second appraisal.
I might be venting a little, and sorry about that, but the good old 30 days closings are gone forever.
It depends a lot on the lender, the underwriter, the broker and the buyer. We routinely close FHA deals in 3-5 weeks, and conventional loans in under 4 weeks. The key is that our broker works with the same underwriter loan after loan and knows that if any part of the deal is atypical to ask LOTS of questions upfront. He also doesn't just sit back and wait for things to happen -- he pushes the process at every step to keep things moving.
Occasionally, the underwriter will miss something or come up with some last-minute conditions that will delay things for a few days or even a week or two, but we haven't had an escrow go more than 8 weeks in a couple years.
Just remember, with the ability to choose your lender/broker, you have a lot a power in this process. Find a great one, and you won't have the long delays.
I don't know if you've addressed it on here before or on your website but how exactly did you go about finding a good lender/broker team. Was it simply a trial and error type process? I was dissatisfied with my last team as they began to drop the ball, stopped picking up the phone, never returning calls, conveniently forgetting my requests, etc. etc.
I definitely wouldn't mind paying a small premium for a good, fast team that I can consistently rely on.
I don't know if you've addressed it on here before or on your website but how exactly did you go about finding a good lender/broker team.
My general rule of thumb is that good professionals (and good contractors) hang around with other good professionals (and good contractors).
So, when I was really disheartened with all the crap I had to deal with when relying on my buyer's to bring their own brokers, I started asking around to the professional folks that I really respected. Ultimately, my closing attorney (who is awesome) knew of a mortgage broker who was doing a good number of closings in his office, and all their clients seemed pretty satisfied at the closings.
I gave him a call, asked lots of questions, and realized that he had all the criteria I was looking for:
- Seemed knowledgeable in general (big one!)
- Seemed to have integrity (big one!)
- Had knowledge of the FHA rules (very big one!)
- Worked with a regional bank that could do FHA in less than 90 days
- Worked closely with his underwriters
- Was happy to spend as much time talking to me and answering questions as I wanted
- Was happy to provide references of satisfied clients
This was two years ago, and he's been part of my team ever since.
Btw, I also have a second broker that I use on occasion, who I found when one of my buyers refused to use my broker. Her broker seemed to be very knowledgeable as well, and got the deal done very quickly.
So, I struck up a conversation with him at closing, and realized that he'd be a great backup broker. I use him on occasion (he's happy to be my backup, as he knows I've been working with the other guy longer), and since he works for a big bank (Wells Fargo), some of my buyers would rather use him than my independent broker. So, it's nice to be able to give them the option.
All that said, I'm not trying to downplay how hard it is to find good brokers -- it's VERY difficult and you have to get lucky. But, the more people you ask (your real estate attorney, your closing attorney, other investors, etc) the more likely you are to find someone good to add to your team.
Pretty much I expected it to be as hard of a process as you described. Luck is definitely a factor. Thanks for giving me an outline in terms of criteria to look for in a broker!
I've actually wondered what would happen if everyone refused to pay for the second appraisal (and the buyer wasn't allowed to)? I guess it would be considered that the buyer was "unable to obtain financing" and whatever contractual actions are associated with that...
Great idea, we should ALL start doing that and MAKE it an agent or other party responsibility item. Seems like it has been done a ton to us for so many other items, why not give one back!
If the time between the last transfer date and the date of the purchase contract are within 91 to 180 days and the appraised value is more than 100% of the previous value, then a full 2nd appraisal is required.This is very common on FHA loans when financing a Quick Turn property from investors.
You don't have to worry that much.Usually the second appraisal will confirm the first one, unless there is a real discrepancy in numbers. In the nutshell, the lender is just looking for a way the have peace of mind when funding a this kind of property.That's all.
J Scott,
I don't know if you've addressed it on here before or on your website but how exactly did you go about finding a good lender/broker team. Was it simply a trial and error type process? I was dissatisfied with my last team as they began to drop the ball, stopped picking up the phone, never returning calls, conveniently forgetting my requests, etc. etc.
I definitely wouldn't mind paying a small premium for a good, fast team that I can consistently rely on.
Escrow agents who do a lot of consumer closings will know which mtg.brokers get things done and which ones don't. Escrow agents need loans to close in order to get paid. So go to whoever does closings where you are, attorneys or title companies, and find the ones at the top of their game. They know mortgage brokers. :)