Appraisal question

[THE WIDGE]

Buddy was in escrow, he agreed on a price close to asking after a few offers. appraisal comes in 40k less than what is listed and close to final offer. Appraisal came close to original offer I believe. Anyways, buddy still makes aggressive offer based on appraisal, but less than originally agreed. Looks like buddy is walking as seller says he has full offer fha buyer.

My question, does this recent appraisal have to be disclosed w a new buyer. Or would the new Apraisor have record of this current appraisal. I would be pretty upset wasting my time if house can’t appraise. I know we ultimately have the chose to walk, but a lot of time wasted and waste of $ on appraisal.
Sellers saying he has full offer w fha buyer

just curious, thx

 

[Done-it-again]

Banks won’t loan above appraisal. Your buddy can come in with the extra in cash. Cards are in his hands if he wants it. Seller seems confidant the next buyer will be willing to come in with the extra 40k

 

[THE WIDGE]

Yeah he came in w what I believe is a good extra extra cash offer above appraisal. Just not full amount. He’s walking after his final offer. Can you request disclosers of any recent appraisals.

 

[THE WIDGE]

No seller says they have a new full price offer and buyer is fha. I call bs. Buddy is conventional plus some cash over 20%

 

[Hypnautic]

If it’s an appraisal for a Government loan those are reported to FHA and VA.
If another FHA buyer comes in, their lender will request that appraisal to be transferred over. If they do not request it the new appraiser will see the original report.
Appraisal is valid for up to 6 months

 

[Riverblender]

FHA will see the old appraisal, all appraisals are uploaded to lenders in a UAD format. Fannie Mae and Freddie Mac pull this information when it is uploaded to a lender. So yes they will see it and the new one

 

[THE WIDGE]

FHA will see the old appraisal, all appraisals are uploaded to lenders in a UAD format. Fannie Mae and Freddie Mac pull this information when it is uploaded to a lender. So yes they will see it and the new one

even if by buddy was not using fha or va loan? Thx

 

[Riverblender]

Yes if he was going through a bank most likely it was a Federally Regulated Transaction. Most banks package their loans and sell them off. See post 6

 

[Marios Metalworks]

There's an incredible amount of minutia to answering the question but the most simple explanation is that regardless if the new buyer sees the most recent appraised value or not, they'll most likely need a new appraisal.

I think its safe to assume its in the best interest of the the seller and the new buyer/lender to order an FHA appraisal vs. trying to get a conventional appraisal transferred then converted to FHA like @Hypnautic said. Lenders tend to get a little queasy when appraisal effective dates pre-date FHA case number assignments. Shout out to the FHA cracking down in recent years!

 

[THE WIDGE]

Thx, looks like it went pending again, buddy walked, especially in these uncertain times to pay 30-40k over appraisal

 

[OldSchoolBoats]

If an FHA appraisal is done on a property, then that value sticks with it for 6 months and that is ONLY if the new buyer is doing an FHA loan.

People with large downpayment do FHA loans due to the waiting periods being less for derogatory credit events like BK and Foreclosure.

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[arch stanton]

I have flipped almost 100 homes and about 20 multi unit properties This is how it works the appraiser needs 3 similar properties in the area sold in the last 3 months or so to appraise a house if 3 houses in the neighbor hood sells for 500k then that is what they will all appraise for. The only way homes move up in value at the rate we have seen since 2010 is that somebody comes up with more cash money than appraised, so somebody pays 520k in our neighborhood say 10% down 50k plus the extra 20k now the whole neighborhood has the possibility to be appraised at 520k if 2 more homes in the area sell in the 520k range.
If you want a house in this market open up your wallet and play the game, appraised value means nothing in this market you have to be willing to outbid the competition, It really is an auction environment.

When I was working this business we never took the first offer, no matter what all houses stayed on the market 2 weeks minimum and no mater how many offers we got we came back to all buyers with we have multiple offers give us best and final offer even if we only had one buyer, we got more money 90% of the time.

 

[DLC]

I would be curious to see what the 2nd appraisal comes in at...

maybe the 1st Appraisal guy just found out his girlfriend is pregnant and his current wife Thought he had gotten nipped.... is a bad day..

appraisals seem to be suggestive

 

[lbhsbz]

I’ve found some appraisers need some coaching. My old house was right across the street from som railroad tracks. The neighborhood on the other side of the tracks is kinda shady. If the appraiser looks at houses in a 1/2 mile radius, those in the shitty neighborhood get included. Once I explain that they need to stay on my side of the tracks with their comps, the value would come up 80-100K.

 

[pronstar]

This recent Bigger Pockets podcast is with an investor who is also an appraiser. Forward to about 40-ish minutes to the end, and they talk about how to influence appraisals in a way that’s not confrontational, and is often appreciated by the appraiser.

https://podcasts.apple.com/us/podcast/biggerpockets-real-estate-podcast/id594419649?i=1000474542557

Some tips include:
Giving your comps to the appraiser, and also include days on market.
List of upgrades done and cost.




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[EBT531]

A sketchy agent can argue a higher appraisal. I was looking at investment properties near me which were going for $250k on average. All of the sudden they start popping for $275-280k. My agent looked into it and one was an owner/agent that sold and they used a comp that was a few miles away but a single home vs townhome and in a very good neighborhood to justify the sell price. Well now they all use the recent sold as a comp which bumps all future comps up. Its a numbers game!

 

[motormonkey]

I find appraisals are suggestions and the market value will dictate the selling price.
He can wait and see if it falls out or step up the money down if he has to have this property. If not walk and shop.
It's a tough game and good luck as its nuts out there.

 

[Runs2rch]

No shortages of terrible appraisers.

Have contested a few, new appraiser comes out and acknowledges the other person was clueless, supply comps and done.

 

[KevinR]

I look at about 1 appraisal a week, as I’m in the bridge loan business. When looking at SFR appraisals the devil is in the details. Appraisals I look at range from $2M to $20M.

Appraisals provide two sales figures for each sales comp, actual sold price and adjusted sales price. The adjusted sales price is where I focus on and all the appraiser adjustments on a multitude of qualitative items (construction, modernization, location, views, fixtures, finishes, appliances, etc.) and quantitative property data and stats (lot size, house sq ft, # bedrooms/bathrooms, pool, guest house, etc.). I drive by the sales comps to see specifics of their micro neighborhood, street location and immediate adjacent properties. I also look at their recent MLS listing as it usually has many photos of the interior and back yard.

Thinking back the past 3.5 years, my opinion is 15-20% of them have sales comps with inflated adjusted sales prices that will artificially increase the valuation of the subject property. Just my 2 cents.

The good news is whether or not you are the buyer, seller or lender, you still make the determination of your valuation and make your decision on the transaction

 

[pronstar]

Something to consider is days on market. Prices climb in a hot market.

There are other factors as well.

If every appraisal just looked at comps, home prices would remain flat and never appreciate.


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[KevinR]

Pron I don’t follow your last line. What else do appraisals look at other than comps relative to the subject property? And how are these issues/items responsible for home price appreciation?

 

[pronstar]

Pron I don’t follow your last line. What else do appraisals look at other than comps relative to the subject property? And how are these issues/items responsible for home price appreciation?

Sales of similar properties, and current market trends, makeup a good appraisal.

As an example:
Let’s say comps are selling in 2 days. If you put a house up for sale and immediately get 12 offers, all over list, it’s a strong sellers market which means supply could be tight...this could justify a higher price.

If comps are old, and inventory is sitting for 9 months, then the appraiser needs to take market conditions into account. In this case, demand is low so a lower appraisal would be justified.




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[KevinR]

Agreed with regard to time on the market for comps and date comps sold. Thanks.