One hand certainly doesn't know what the other is doing, or do they?

By
Real Estate Agent with Berkshire Hathaway HomeServices New England Properties Licensed in Connecticut

I'm confusedOne hand certainly doesn't know what the other is doing! I read a featured post this morning by Lisa Udy, "High Offers Offset by Low Appraisals - Fair And Balanced? Or Unfair?". Lisa has pointed out a new trend, buyers who want REO listings and put in offers higher than asking price, only to "renegotiate" when the appraisal comes in. I suggest you read this post, it is eye opening as are the comments.

Reading through the comments I saw that some are participating in this tactic and see no ethical issue with this. Others think this is bad business. Many pointed out that banks are on to this tactic and put in the contract that the buyer is responsible to pay the difference if the house doesn't appraise.

I am not here to debate the tactic, I was scratching my head and laughing. It is very obvious that one hand doesn't know what the other is doing. The last 3 transactions I have had with buyers something new popped up with the mortgage. We never really had a clean mortgage commitment, up until closing date. Some banks have added a new requirement to the mortgage commitment. It says that the house needs to appraise at the time of closing. All contingencies were removed, yet this new one was added. What it meant from a legal standpoint?  According to my buyers attorney the mortgage contingency was indeed not really met. In all 3 instances the sellers attorneys understood this was as good as it gets and accepted the fact that it wasn't really ever going to be clean until we closed the deal.

Quesion markSo, in the end it doesn't really matter. If the lender sees the problem they can refuse to lend the money, the buyer will be unable to perform and the contract can say that the buyer is responsible for the difference, however if they can't get a mortgage they can't buy the property. I am obviously not talking about investors with cash.

Tell me, does one hand know what the other is doing? Or do they know exactly what they are doing?

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one hand doesnt know what the other is doing

Comments 13 New Comment

Ambassador
1,250,362
Robert (Vegas Bob) Swetz
Commercial & Residential Real Estate Agent
REALTY ONE GROUP - LAS VEGAS, NEVADA 702.443.7156
Andrea - Great post and another feature my friend!
November 04, 2009 09:11 PM
Rainmaker
664,855
Claude Cross
Charlotte NC Homes For Sale
Claude Cross-Charlotte NC Real Estate(Homes By Cross, Inc.)

Andrea - Wonderful point ! Apraisal at the date of closing is a twist. Starting to sound like picking stocks. Most of my clients just want a home. Great post

November 04, 2009 09:47 PM
Ambassador
884,332
Andrea Swiedler
Realtor, Southern Litchfield County CT
Berkshire Hathaway HomeServices New England Properties

George, I think that is not uncommon. There is such a mess, from all sides. It is not for the faint at heart, that's for sure.

Dedra, that is what is happening, I was at a closing recently where the other attorney said that he was ready to retire, it was enough.

Robert, thank you!

Claude, thank you. When we saw it the first time we were surprised. Then it came up with the last 2 also. I am mystified. Guess the lenders are worried that all their REO's will cause the appraisal to plummet in the last 3 weeks. Whatever their reasoning's, it just doesn't make any sense. Gives you that shiver right up your spine.

November 05, 2009 05:35 AM
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Liz Moras
Chilliwack Realtor, Garrison Crossing,Chilliwack, Abbotsford
Harrison Hot Springs, Cultus Lake

It's crazy what you guys do don't south there! lol

November 10, 2009 11:21 PM
Rainmaker
1,083,692
Jim Frimmer
Realtor & CDPE, Mission Valley specialist
HomeSmart Realty West

I think there are a lot of people involved in real estate who have so many hands in everything that they couldn't possibly know what they all are up to.

November 13, 2009 04:35 PM
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Andrea Swiedler

Realtor, Southern Litchfield County CT
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Additional Information

Licensed in Connecticut.

Real estate and local area information for Southern Litchfield County CT. I assist buyers and sellers in New Milford, Bridgewater, Roxbury, Washington, Warren, Kent & Sherman (Fairfield County).