Appraisal Came in Really Low
Hi! I’m in contract for a 2BR apartment in Cobble Hill. My bank’s appraiser came in with a value that seriously undercuts the price (contract for 550, appraised at 500). The comps used for the appraisal are kind of wacky. One is a year old and the square footage used is higher than what the…
Hi!
I’m in contract for a 2BR apartment in Cobble Hill. My bank’s appraiser came in with a value that seriously undercuts the price (contract for 550, appraised at 500). The comps used for the appraisal are kind of wacky.
One is a year old and the square footage used is higher than what the floorplan indicates. One has no kitchen (Fridge and stove hanging out in the living room) and a 50sqft second bedroom.
One is in Gowanaus. One of the comps had a higher price per sqft, but was conveniently left out of the final calculation.
This was an FSBO, and no brokers were used. If the appraisal came in a shade lower, i think the seller and i could work it our…but it’s so much lower, that it’s not good for anyone. And, even though i’d love to get it for 500, the comps just don’t make sense.
Any suggestions?
This has nothing to do with FSBO vs. real estate broker. This same situation is happening to us with a purchase and Corcoran is the broker. They didn’t seem to have the expertise to properly value the property – and they are the big wigs in the neighborhood. From what I hear, this is happening left and right.
I’m wondering why the process is so backwards!? Maybe sellers should have to get an official appraisal before setting an asking price and the market will get back to where it belongs…
you should try a different bank. annoyingly i just found out that BOA wont accept the valuation that citibank just gave us a letter of commitment on 3 weeks ago.
even though the valuer is a third party independent it’s going to cost us another $400 for another valuation.
it sucks.
Hi,
This is happeneing more and more. The best advise I can give is to use a mortgage broker who can pick and choose different banks to lend and appraise homes. Certain banks use management companies that are very conservative when it comes to appraising homes. Ive been in the mortgage business for 12 years and work with 30 different lenders.
Email me if you need any further help
vsarrica@equitysource.com
Good Luck
The issue is about having a real estate broker. While regulations were changed, a real estate broker would have known how to price the apartment, get the appraisal done, and close the transaction. They also know many terrific mortgage brokers/companies. Appraisers are usually called on by the lender. While they may not be familiar with the neighborhood because they are from Long Island or New Jersey, it is up to the broker to educate them about the environment and what has sold. People are getting mortgages everyday in Brooklyn and appraisals are coming in at the appropriate price. The seller in your transaction should have just called a licensed real estate professional from the start, the commission has already been paid at this point.
the issue here isn’t the broker or lack thereof. the mortgage regulations were changed last year, so only the lender is allowed to call for an appraisal. before, the broker, seller, or buyer could select an appraiser…now all of that responsibility is given to the lender, it doesn’t matter if you , or broker, or your brokers dog gets a better appraisal the lender is not allowed to use appraisals they did not commission. the problem is that a lot of mortgage shops and banks hire nationwide appraisal companies who send appraisers out who are not familiar with local markets and do not pull comps correctly, which is probably what happened to you, you can try asking for a reappraisal, but it is not likely that your lender will be that amenable. the same thing almost happened to me, and my mortgage broker went on a rant about the new regulations. we ended up appraising $500 more than the contract price but it was close. I was advised that if the property i was trying to buy did not appraise, I would have to increase the cash I brought to the table to make up for the difference or keep shopping.
All the seller needs to do and should have done, so as not to waste time and money, is to get a licensed real estate professional to handle the transaction. Really quite simple. Everyone tries to save money and in the end, this is what happens. Trying to save a little money and now look, oh well.
Sounds like the seller may just have to go with it. I doubt he’ll want to do this all over again.
This is where a good broker is worth their weight in gold. I’m selling an upstate property right now and the broker is worried about the appraisal because it’s a unique property. He’s pulling his own comps (there are only 2 and one hasn’t even closed yet) because he knows the appraiser isn’t going to bother.
Not that my story helps you. If you don’t have more $ to put down and the sellers don’t want to lower their price, you may want to go with a mortgage broker instead of a bank.
It’s funny how people say there are no buyers in the market or less. I think there’s enough however, it’s the ability to get the right mortgage. Lending is tough and banks expect another bubble off of credit cards, commercial property or who knows what else. As a result, they’re tightening credit. Many claim it’s a rich man’s shopping paradise. Many who know they can ask for lower prices now compared to before also are expecting to pay more in deposit. 30-40 percent deposit is not so far off. If you can’t do the deposit, either postpone until you can, you can delay the closing, ask the seller to lower their price… good luck or find a mortgage broker that can get a bank to do this for you…. keep in mind the fees are in the thousands. I’d recommend a bigger deposit as more4less said.