Monday, April 28, 2008

Appraisal issues

The FHA has tightened its appraisal standards due to the housing crisis and typically requires houses to be compared to similar properties sold in the neighborhood in the last three months. They also can use current listings and pending sales to a degree.

Remember when I thought it was an advantage that nothing had come on the market in my price range in my area?

I had three written offers at and above the list price of $118,000 in less than a week, which shows the market agrees with the price, but it has to be proven through other sales.

The house has to be appraised at or above the purchase price in order for the buyer to get her loan. Banks want to recoup their money by selling the house if the buyer should not repay the loan.

Where I screwed up: I threw out the other written offers. They were only good through a certain date, which had passed, so I couldn't think of a reason to keep them. I have contact info for the potential buyers for an updated offer if this sale fell through. Now I have learned those written offers could have been used as part of the appraisal.

The appraisal was supposed to be finished Friday but was delayed because the appraiser was still trying to find "comps."

Today I should find out what the FHA has appraised the house at. Then the FHA inspector will have to come back to inspect the work I've done, which should lessen or eliminate the the amount to be put into escrow.

Depending on where the dollars fall, all of this could potentially undermine the sale.

Keep in mind, the buyer is supposed to close Friday.

I'm out time and money for this last round of projects; however, the house looks even better, should I need to put it back on the market.

The buyer has to move out of her apartment regardless.

So we're left to negotiate big decisions under unnecessary pressure because this appraisal/inspection process occurs so late.

Links:
Appraisal basics
What to do when an appraisal comes in low

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