The Appraisal Came Back Too High - Sorry, There's Going to be a Delay in Closing?!

By
Real Estate Agent with Donovan Blatt Realty 01267479

The Appraisal Came Back Too High - Sorry, There's Going to be a Delay in Closing Your Short Sale?! (UPDATED)

 

The pendulum has definitely swung.  A few short years ago, a borrower could sign his name for a million dollar loan without having to provide proof of his income or his assets.

Today, even a borrower who has good income and a lot of money for a down payment can find it difficult to obtain a loan without jumping through many hoops.

 

Rules keep changing.  A year ago, HVCC was enacted which prevents buyers, their agents or their lender from choosing the appraiser.  The purpose of this is to preven an appraiser from being unduly influenced in valuing the property.  However, it results in other issues.

 

Worried Orange County Homeowner

In this case, there were two appraisals done.  The first came in more than 20% higher than the purchase price.  I thought, great, this is going to be no problem.  But, then I was informed that the appraisal was too high, and we needed another appraisal?! 

WHAT!!?? I've been around this industry since I was in single digits, and I've never heard anything like this.  It turns out that we needed another appraisal because the first appraisal was over $1,000,000 even though the purchase price wasn't.  So, we got a second appraisal, which also came in over $1,000,000.  Now we needed an appraisal review.

The reviewer came in and cut the lower appraisal by over 22%.  Now, I really had a problem, because it was significantly below purchase price.

This was a short sale, and we were running out of time to get things done.

What do we do now??  I needed to find a solution.  So, I did something I had never had to do before when we could speak with our appraisers.  I wrote an appraisal rebuttal explaining things the appraiser didn't know that effected value.  Things I would have been able to discuss if we'd been able to talk.

The result? The appraisal review was increased to just over purchase price, and we were able to close with a significant delay.

So, it's a happy ending.  The buyer is in a new home and is ecstatic.  The seller avoided foreclosure and can move on from here with nothing hanging over their head any longer.

Are you facing foreclosure?  Do you know what your options are?  Would you like to discuss them?  Please contact me at 714.319.9751

 

UPDATE - From the comments, it looks like some think the appraisa in question was the BPO (Broker Price Opinion) for the seller's sender.  The appraisals in question were done by the buyer's lenders.

 

 

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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.

Are you upside down in your home? Is it worth less than you owe? Are you concerned about making your mortgage payment? For more information see Options to Foreclosures, understanding short sales or contact me at christine@donovanblatt.com to discuss your options.

If you want to buy a home or to list your property for sale, please click Newport Beach homes, Costa Mesa homes, Huntington Beach homes or Orange County homes.  Click the link if you are interested in buying a home at a courthouse auction sale.

Contact me at christine@donovanblatt.com or 714-319-9751 to learn about her system which will make your buying and selling experience easier.

Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.

Click Orange County homes for sale to view all OC homes for sale.

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Donald Bradbury 03/18/2010 08:13 AM
  2. Sharon Paxson 03/18/2010 06:48 PM
  3. Bonnie Augostino 03/19/2010 06:32 AM
  4. Patricia Aulson 04/16/2010 11:38 AM
Topic:
Home Selling
Groups:
Addicted to Active Rain
Almost Anything Goes
Short Sales Specialists
"Whacked"!!!
Tags:
short sale
appraisal
appraisal review

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Show All Comments
Rainer
78,067
Claire Record
Keller Williams Realty--Boerne Hill Country - Boerne, TX

WTG Christine...  This whole loan thing is getting nuts.  I get to see some clients of mine FINALLY close on a construction loan where they had stellar credit and put 50% down.  The loan took 90+ days to process due to the new regulations.  The hiccup came with the appraisal.  Holy cow...I hope this gets better.

Mar 18, 2010 05:31 PM #62
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Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Christine -- Smart move. Good thing you didn't just give up and let the bank have it's appraisal the way it was.

Mar 18, 2010 05:38 PM #63
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Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

PS--I recently had a FHA deal (non short sale) held up because house appraised too high. Totally different situation, but lender wanted to know why we got such a good deal.

Mar 18, 2010 05:39 PM #64
Rainmaker
198,519
Ed Gillespie
Rocklin, CA

Thanks for sharing this Christine! I'v also had "issues" with review appraisers. It's like lenders are looking for excuses to deny a loan. What (may I ask) was the reason the review appraiser cut the value of the lower of the two appraisals by 22%? 

Mar 18, 2010 05:43 PM #65
Rainmaker
514,997
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

I have to agree with comment #1...... I had them come in a little over but not "too high"  Thanks for the story today. I enjoyed it.

Patricia/Seacoast NH

Mar 18, 2010 05:54 PM #66
Rainmaker
1,173,297
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566

Great ending to the story. Just when you think you have heard it all, you realize there's more to hear.

Mar 18, 2010 06:22 PM #67
Rainmaker
723,622
Sharon Paxson
HÔM Sotheby's International Realty, BRE License 01501912 - Newport Beach, CA
Newport Beach Real Estate - HOM Sotheby's Int'l Re

Christine - thanks for sharing this information and so glad that you had a positive result in the end! Congrats on the closing!

Mar 18, 2010 06:46 PM #68
Ambassador
897,445
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Realtor - Ann Arbor Real Estate

Wow, been a long time since I have seen that one. But I have. It was on a short sale and the bank would NOT budge. So the home went to foreclosure. It will never sell at that price so I am waiting to see 1) what it is listed at 2) What is sells for. 

 

 

Mar 18, 2010 07:18 PM #69
Rainmaker
420,595
Leslie Ebersole
Baird&Warner Fox Valley - Saint Charles, IL
REALTOR - Chicagonulls Western Suburbs

All Realtors should know about Fannie/Freddie guidelines for resale on the open a market. I had this happen in November on a regular priced sale. My client was buying from a property from an estate after the vacant house sat on the market for almost two years. We made a low offer and they accepted it -- good deal! The appraisal came in close to list price but about 20% over the contract price. With 20% down on the property, the appraised value exceeded the amount of equity that a loan can have for resale. The morning of the close an area VP for one of the world's largest banks had to personally approve taking the loan into inventory rather than reselling it. Crazy!

Mar 18, 2010 08:08 PM #70
Rainer
25,604
Joseph Keech
Blue Atlantic Properties - Leland, NC

I've had issues similiar to this as well. Very frustrating! You wouldn't think an appraisal being too high would be an issue! Thanks for sharing.

Mar 18, 2010 08:36 PM #72
Rainmaker
105,444
Grant Howell
Alex Lowery Real Estate - Frisco, TX
Broker/Owner 214-234-6901

Interesting!  Nice resolution, but I can see this becoming a trend if banks feel they are leaving $ on the table. 

Mar 18, 2010 08:41 PM #73
Rainmaker
172,509
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

I'm surprised by outrageous inconsistency by appraisals. Happily, listing agent can communicate with appraisals and they do. 

Mar 18, 2010 09:07 PM #74
Rainmaker
446,531
Vickie McCartney
Maverick Realty - Owensboro, KY
Broker, Real Estate Agent Owensboro KY

I have had homes come in higher than the purchase price, but it has never been a problem.  At least not yet!

Mar 18, 2010 09:55 PM #75
Rainmaker
979,172
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

Christine, that just doesn't make sense. It appears to be a deliberate effort to continue the decline in the market. It makes sense that distressed properties will appraise for more than the purchase price, so what's wrong with that?

Mar 18, 2010 10:23 PM #76
Rainer
38,433
Jennifer Grace
Elk Grove, CA
Jennifer Grace

What happened to the people based business that we started with? 

It's good to hear the rebuttal worked and everyone won in the end.

Mar 18, 2010 11:27 PM #77
Rainmaker
157,943
Jonathan Osman
Keller Williams Realty - Charlotte, NC
Charlotte House Hunter Group

We just had a bank kick back the appraisal because the home appraised.  Similar situation: someone at a desk somewhere not even remotely in Charlotte popped the home on Cyberhomes or Zillow and said: denied.  Second appraisal matched the original.  More money wasted by the borrower but the deal was done.

Good post

Mar 18, 2010 11:53 PM #78
Rainer
23,206
Bob and Debbie Gibbs
J. Rockcliff Realtors - Danville, CA

I have had a similiar situation with our last two escrows. The appraisals came in under the offer price on each one by exactly $10,000. When I look at the comps manyh werer chosen from as much as 1.5 miles away even when there were some closer that would give the home a value over asking. Something things a bit strange with the whole process right now.

Mar 19, 2010 11:16 AM #79
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

Geoff-  It's unusual for the appraisal to come in so much over list price, but then there was a huge over correction the other way.

Connie . It seems like there's something new every day.

 

Mar 19, 2010 08:00 PM #80
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1,576,090
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

Bruce - It was for me too.

 

Wayne and Lynda - I definitely wasn't bored.

Robert - It wasn't the seller's bank's appraiser.  It was the buyer's appraiser.

Joe - HVCC has been one big headache.

David - Funny you talk about fastening your seatbelt.  I refer to trouble in a real estate transaction as being similar to the turbulence in an airplane.

 

Michael - I didn't have much choice.  I needed to get this done for my client.

Debra - I agree with you, but I am not the decision maker, just the problem solver.

 

To all -  Thank you for taking the time to  comment.  I'll make more responses to comments on Monday when I'm back and not on a little, tiny Netbook.

Mar 21, 2010 12:28 AM #81
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Judi K Barrett
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma - Idabel, OK
Broker/Owner, Integrity Real Estate Services -IDAB

Christine,

I've had banks get appraisals adjusted because they were too high and it was not a short sale. 
Speaks loudly to banks pretty much doing whatever they want to.

Mar 21, 2010 05:20 PM #82
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Christine Donovan

Broker/Attorney 800-610-7253 DRE01267479 - Costa M
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