Second Appraisal..
Hello all. This has come up a few times in our rehabs, and I've been pretty worried because we had a property in the past where the buyers backed out due to low appraisal. Has anyone dealt with the 2nd appraisal coming in low and how do you deal with it? Is it a good idea to meet the appraiser at the property? I'm sick and tired of these appraisals..
Originally posted by @J Scott:
The key is to avoid a low appraisal in the first place -- once the appraisal comes in low, there's a very, very good chance there's nothing you can do about it at that point.
When getting a REFI on our personal home, the first appraisal was dismal and I challenged it as the guy was located 60 miles from my location and totally unfamiliar with the community. I offered to pay for the second appraisal and nominated two others with professional licenses nearby.
~$70k improvement :grin:
Sorry to be blunt, but you are an idiot if you or your broker does not meet the appraiser and provide them with all the data that supports the asking price.
As far as FHA I believe (90% positive) the seller is responsible to pay for the second appraisal, but you may be able to ask the lender to pay for it. The buyer pays for the first one out of pocket. Doesn't make sense that they would pay for two.
Originally posted by @Sarah Ziehr:
Sorry to be blunt, but you are an idiot if you or your broker does not meet the appraiser and provide them with all the data that supports the asking price.
As far as FHA I believe (90% positive) the seller is responsible to pay for the second appraisal, but you may be able to ask the lender to pay for it. The buyer pays for the first one out of pocket. Doesn't make sense that they would pay for two.
At first your use of the word "broker" confused me, then I saw that you were in Illinois where I've read that "broker" is synonymous with "person in real estate, regardless of capacity, license, or education." :)
FHA does not require that the seller pay for the second appraisal, it only prohibits the buyer from paying for it.
Who can pay for the FHA 2nd appraisal:
- On my deals, if I didn't catch that it was a flip, I pay for it. If I caught it and told everyone the day I got the contract that this was coming so be ready for it, I'm not paying for it. This rarely happens, I'm a cheap bastard. :P
- Seller can pay.
- Lender (the institution, not your mortgage gal/guy) can pay. I'll typically try to do this by calculating appraisal cost in basis points, and finding a way to either decrease the discount points, or increasing the lender credit, accordingly. If the day of the month is even, our compliance people say this is OK. If the day of the month is odd, our compliance people say that this is not OK (discrimination you idiots? really? we're being too nice, and THAT is discrimination now?).
- Agent ("broker" if in Illinois :P ) can pay.
- That guy Fred down the street.
@Chris MasonThanks for the clarification. All I know is I have a buyer who is FHA right now and she is not paying for the second appraisal. Since I know I am not paying it, I figured the bank or seller will gladly pony up. Its a flip so likely the seller.
And yes, in Illinois either you are a broker or you are nothing. NOTHING!