Buying or Selling a Home/apprasial

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Expert: Jim Root - 5/2/2010


Question
Hi Jim, I am buying a house for 280, appraisal came in at 255  i am putting down 70 should there be any problem.?

Answer


Hey KELVIN--

If you've offered $280,000, it's been accepted, you now have a Contract that mandates the price, terms and conditions of the transfer of ownership of the property involved.If A State-licensed or certified Residential Appraiser has established a FAIR MARKET VALUE of $255,000, you may or may not have any problems. Depends!

If you are willing to pay cash to over-ride the $25,000 deficit, and have cash enough to do that and also pay whatever downpayment, loan and closing costs you are required to pay out-of-pocket, there's no problem (except you'll be buying a house for $25K  more than it's worth!)

You say you've got $70,000 ready for your downpayment? Of course, if you use $25K of that to pay the difference between the LIST PRICE & FAIR MARKET VALUE, that will leave you only $45,000 for the downpayment, loan & closing costs.If that $45K is enough to cover these out-of-pocket costs (over and above the $25K needed to satisfy the deficit),and the lesser downpayment won't INCREASE your monthly PITI payments to an amount that exceeds your overall Debt-to-Income (DTI) ratio, again:you'll be over-paying for the Home, but it'll make the deal work.

Another option MAY be to cancel the transaction. This also DEPENDS on something. MOST Real Estate Contracts include a FINANCING CONTINGANCY, allowing the Buyer to "walk away" if the financing is disapproved. Your Lender MUST disapprove your loan IF the Appraisal is for less than the agreed-upon price!(OR someone agrees to pay the difference, in this case the $25,000 difference.)CHECK YOUR CONTRACT--NO FINANCING CONTINGANCY? There's a problem!

If you REALLY want THIS home, I suggest you negotiate with the Seller. Maybe you can come to some compromise, like 50/50 or $12,500 each to pay off the deficit and make the deal work.
Over the years I've seen many  a "Low-ball Appraisal" result in a better deal for the Buyer!

I hope my ramblings have opened your eyes to a few options you have with the $25K "Lowball Appraisal." GOOD LUCK!

--JIM

PS: If negotiations get "tough," ask your Realtors (Listing AND Selling) to "throw in" some of their Commission. Remind them that a small Commission is better tha no Commission at all.  

Buying or Selling a Home

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Jim Root

Expertise

How to select the right Real Estate Salesperson & Loan Officer--ones who will serve your best interests! House-hunting tips & suggestions on selection of the home best for your family needs. Introduction to the Home Buying Process & all the "Players" involved.What is of utmost important to the Homebuyer? Real Estate Contracts & Negotiations, Appraisal needs, Title Co. involvement, Home Inspection issues& the Closing/Escrow systems, etc. Whatever your question, the answer will follow, whether from personal knowledge or research! Gale, shown here with me, has been a Real Estate Office Administrator, licensed Realtor & has served as my Research Assistant over the years!

Experience

Over 30 years as a "Real Estate Professional." including Real Estate Marketing & Sales, Appraisal work, Mortgage Banking & as a Realty Officer with U.S Dept. of HUD's FHA Homeownership Division in Alaska, Washington & Idaho! Some experience in Montana, California, Utah & Nevada markets!Knowledge of National Markets by continuous Research!

Organizations
Former member of Nat'l Ass'n of Realtors (NAR) & Mortgage Bankers Ass'n of America (MBAA). Currently with National Association of Review Appraisers & Mortgage Underwriters (NARA/MU).

Publications
Published in various local, state, regional & national Real Estate-related magazines & newsletters!Co-author of various Govt. publications on Homeownership, Appraisals & Mortgages while with HUD/FHA.

Education/Credentials
Associate Degree in Real Estate Studies plus: Numerous Real Estate-related Courses conducted by the U. S. Government & Private Industry over the past 30 years. Bachelors Degree in Mass Communications, Masters Degree in Education/Teaching

Awards and Honors
Professional Designations: Certified Residential Originator (CRO) from MBAA, Registered Mortgage Underwiter (RMU) & Certified Review Appraiser (CRA) from NARA/MU. Outstanding Peformance Awards for 10 of the 12 years with HUD/FHA & numerous Sales/Listing Awards while a licensed Real Estate Agent.

Past/Present Clients
No longer selling/listing Real Estate, nor Appraising properties, nor working in the Mortgage business, this "Real Estate Pro" serves as Director of a Company that provides Professional Development Seminars & Workshops to the "Real Estate Industry" and provides free (as needed) & fee-paid (on a sliding scale) consulting & inspection services to members of the general public.Your questions will be answered without "salesmanship" & with your best interests in mind!

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