[crazy_bd]

So, what happened now, when I finally thought I was over the obstacles... is the bank presents a new problem to me. (this will be long, please bear with me)

This is the storyline:
End of March - I bid and win, about 5k over list, there was a bidding war. Single story home, 1250sqft, pool, turnkey shape more or less.

End of April - appraisal finally comes in over three weeks after being ordered. It is way less than agreed upon price, and it is also made clear at this time that the house is back on the market within 90 days of current owner's purchase.

Mid May - Banks will not issue a loan based on the above situation, I back out of escrow.
Most of the details up to this point can be found here: https://www.city-data.com/forum/las-v...-2nd-time.html

End of June - House is still available, title company has held on to my earnest deposit all this time (even though I asked for it to be returned... hmm, fishy?) and we now reopen escrow with a new contract, seller has agreed to come down in price. Closing is set to 30th of July since bank has all paperwork on me and appraisal is already done.

Beginning of July - house passed inspections with flying colors. (yesterday) Everything, including the pool, is in great shape, < $300 would repair all issues listed in the inspection report)

Today - bank calls me and says, umm... we're not sure we can use the old appraisal because of the commentary...
I have included it here, with my own comments in bold:

This is a flip sale with a contract price of $144k, some $60k over the acquisition price. Current owner of public record (I am incorrectly listed here) bought this property just one month ago, in March for $86k, (I am personally amazed by this price) out of foreclosure, deed in lieu of foreclosure or forfeiture/short sale proceedings. On the following day, owner had it up on the Multiple Listing Service (GLVAR) listed for $135k, then changed it the same day to $140k and has been in contingency escrow since April 2010 at $140k. No part of the Purchase Contract explains why buyer agreed to pay $144k, $4k more than the MLS listing price of $140k. (anyone even just remotely in touch with the current market would know there is a bidding war and homes go almost always for over list, at least during the last 6-10 months) Thus, there is an appearance, right or wrong, that the buying party may have been poorly informed. It is assumed that current owner (me again incorrectly listed) is in the business of buying, remodeling and selling homes for an entrepreneurial profit. The part that intrigues this appraiser is how was the offer price been put together. Data research in the sections 12 and 13, page 13 of Metro Maps reveals the subject as the highest current listing in the 950 to1500 square feet market (subject is 1252 sq.ft.). (Because of selections made by appraiser that really do not accurately represent the current market, and marking the value of the pool only to 10k) Thus, it appears that the only concern of the owner was to maximize the pure profit with no regard to the issue of legitimizing the offer price by anchoring it around any supporting closed sale in subject's market (for list of recent sales, refer to "CLOSED SALES IN THE PAST SIX MONTHS" in the Addendum Section). The Reader is reminded that this continues to be a declining market. While an uptick might be the latest swing, the market is still very volatile. Many real estate monitoring outlets (DQnews.com shows values declining 26% y-o-y) indicate property values still declining in the double digit rate on yearover-year basis, whereas the adverse economic climate of the past year has not changed, i.e., economic recession, tight access to credit, soaring unemployment rate, large supply inventory, etc..
The appraiser wishes to acknowledge that a large amount of work was indeed performed and the subject property is in fine shape. Nonetheless, between issues of over-improvement and lack of market support for the listing price, my opinion of value is concluded to be $120k. This value is widely supported by the comparables presented in the report, which are locationally, physically and functionally similar to subject and a representative sample of recent sales in subject's market.

Now, in the same neighborhood, I have looked at a HUD home (appraised) in horrible shape, no pool, about the same sqft, smaller yard for 117k. Another house, HUD, listed at 130k, no pool, terrible shape, same neighborhood, about same size. Also, other homes throughout the SW, W, NW in the same price range and size range have fallen way short of this home.


Now I am facing the following possible scenarios:

-Getting a new appraisal, risking to go over time on the contract and be out $100/day after time is up.

-Getting a new appraisal, which comes in even lower and have to go out of pocket (although I seriously doubt this, the inspector said I should in theory be able to sell it right away and make a profit after he learned my new contract price)

-Getting a new appraisal, and have the underwriters come back and questioning why two appraisals were done.


I asked my bank contact why this would be an issue, since the underwriters also are within Chase, why can't the situation be explained and communicated to them?!? My bank person said that even though "they can communicate" she and her supervisor's best case scenario is that the underwriter comes back and OK's the new appraisal without looking too closely at the fine print mentioning the previous appraisal.

I am now pushing for a very fast apprasial (which will be free of charge for me) and for Chase to cover any additional fees for going over time on the contract.

Is there anything else I can do!? I am sick and tired of feeling like I am facing two new obstacles for every one I pass.

Thanks for your time and thoughts.

[gopheralex]

If I were you I would take a step back and look at the situation rationally.

First of all, you are not being burned by any appraisals, you are being burned by the clash between reality and your expectations. The appraisal commentary sounds totally reasonable and it should be obvious why any bank would be hesitant to finance this place at your bid price. (The last 1/3 of the commentary lays it out better than I could.)

Put yourself in the bank's shoes. Market declining 26% YoY. Bid at $144k on a house that sold for $86k in March. In Las Vegas. This worked as recently as 2008 because banks could merely pass on the risk to secondary investors. But the leash has tightened and banks have become more inclined to actually, wait for it, lend responsibly. Historically, that has meant 20% down, payment no more of 1/3 of monthly income. That is the mean to which the market is in the process of returning.

Bidding wars on falling properties is evidence that the market has yet to regain its sanity. Just think of it like this: you are being outbid by gamblers who think they are being smart by getting in on the ground floor of Housing Bubble 2.0, which will be spurred on by....... something. If you feel the same way, you're doing everything right, so just keep doing it. If not, why not cut out all the stress and wasted time and rent for a couple years until things settle down -- potentially much further down -- and the speculators have been carted out feet-first from what remains of the market. You will then have your pick of properties at substantially lower prices, and enough money saved to afford a realistic down payment. The banks, those that remain, will be happy to finance your acquisition of a decent place to live rather than a short-term leveraged investment vehicle.

[crazy_bd]

But the question to be asked isn't why the price was so much higher, the question is rather how was the current owner able to get it at 86k? I have been looking at homes in the 110k-160k range for about 8 months now, and I have a pretty good idea of what this house is worth.

I am being burned by the appraisal, you misunderstand my situation. My expectations are based on the house value appraised at 120k. I am fine with that, it is accepted. The problem is that now they say I can't use the appraisal because the factual errors of the commentary. The value has nothing to do with it (strangely enough). I do not have to get a new appraisal to try to raise the value, but to get rid of the erroneous comments. Besides, we're not going to see a 26% decline from 2010 to 2011, or am I wrong!? How can you not question the appraiser's compentence when they express confusion over a home in this price range having multiple bids? This is, today, the norm, and may be until the market really stabilizes. But why should that mean that I should not be able to buy a home?

So, what I perceive as the bank's lack of ability to communicate within its own branches/departments is possibly going to delay the escrow and by doing so, add to my expenses. This is my grief.

I do not see why the bank can't call the underwriters and say "hey, there's a few errors in the appraisal, the owner is not listed correctly and it's no longer a flip property as it is stated there, but we'd still like to base the loan on the value mentioned". Why can't that be done?

[007 license to sell]

gopheralex, your right on. What is happening with making and offer higher than the other multiple offers just to secure the bid, is causing people to offer more then the home is worth. and when the appraisal is done the appraisals are coming in lower than the offers. It's like most auctions it's easy to get caught up in the moment.
Even if the buyers realtor had done a market analysis to support the offer it can go side ways so easily if lower sales happen after the market analysis is done plus if the agent didn't use sales that aren't in the MLS to be taken into consideration, that can totally change what the actual appraised value of the home is. Plus realtors need to tell their buyers that the possibility of having to pay for two appraisals could happen if the sale takes longer than the original closing date.Banks will demand a second appraisal and in the case of some nonconventional financing that can happen more times then not.

[crazy_bd]

Still, you are missing my point. I am not questioning the value on the appraisal. I am fine with it. The seller has adjusted the price. I am questioning why I need a second appraisal to correct the wording and factual errors - NOT to adjust the value.

[007 license to sell]

Originally Posted by crazy_bd

Still, you are missing my point. I am not questioning the value on the appraisal. I am fine with it. The seller has adjusted the price. I am questioning why I need a second appraisal to correct the wording and factual errors - NOT to adjust the value.

To answer your question, it is the wording that is effecting the appraisal, and by having a second appraisal the bank will be able to see if the first appraisal is on point. Generally second appraisals seem to come in lower and the bank could be looking at that especially since some time has lapsed.
Also since banks have to use an outside source to order the appraisal that is another reason it can take a while before and appraisal is done. And some appraisers are coming in from out of state and have no idea how to put a value on a property since they aren't familiar with the area.

[crazy_bd]

Originally Posted by 007 license to sell

To answer your question, it is the wording that is effecting the appraisal, and by having a second appraisal the bank will be able to see if the first appraisal is on point. Generally second appraisals seem to come in lower and the bank could be looking at that especially since some time has lapsed.
Also since banks have to use an outside source to order the appraisal that is another reason it can take a while before and appraisal is done.

Thanks for the information!

Originally Posted by 007 license to sell

And some appraisers are coming in from out of state and have no idea how to put a value on a property since they aren't familiar with the area.

However, isn't this completely absurd? Totally counter-intuitive.

[WestieJeff]

Originally Posted by crazy_bd

But the question to be asked isn't why the price was so much higher, the question is rather how was the current owner able to get it at 86k?

My guess would be they purchased at trustee auction/sale. In the price range I'm looking at, all the beat up REOs are going back to the banks and the good REOs are getting bought up by investors at trustee sale and being flipped for 50-100k more than they purchased it for.

[crazy_bd]

So when I talked to my bank contact yesterday, I expressed politely my concern and frustration, and that I really wanted this to be done urgently, I really made a point to express that I needed this to be done fast. She said she had already ordered the new appraisal and promised that the appraiser would contact my realtor by noon today. Noon comes, nothing. Bank contact says we're shooting for 3 pm instead. Now it's 3.15pm...