Expert: Jessica Bryan - 6/22/2006

Question
My parents, who live in a small town several hours from me, have just entered into a contract to sell their house as they are preparing to move to a retirement center. Closing is in about two weeks. My concern is with a couple of the processes that have been requested of them, as their realtor is an old friend and some of this stuff just sounds a little weird.

1. They agreed to a price that was several thousand lower than their asking price in exchange for the buyers doing some needed carpentry work on the house.  But when the contract came to them, the contract price was their asking price, and they were asked to refund to the buyers the difference from the verbally agreed lower price after the sale.  Is there anything in this arrangement that could cause problems for my parents later?

2.  When the buyer's appraiser contacted my parents to make the appraisal, he asked them all sorts of questions that we had never experienced from an appraiser before, such as what the lot and parcel numbers were, and he demanded to see the contract to sell.  Shouldn't an appraiser already have the home and lot information available from public records?  And why would he need to see the contract?  

My siblings and I are just concerned because none of us have ever experienced anything like this in any of our home transactions.  

Answer
Dear Marla;
The first question dealing with the refund of several thousand dollars is something that needs to be disclosed to the Buyer's lender. This is a tricky situation and while it is often done it is with the full knowledge of the closing attorney and the lender. Anything else could be construed a loan fraud.  Basically it is being set up to appear that they are paying full price for the home but after inspection and negotiation they find that work needs to be done that the seller decides to credit the buyer at closing rather than do themselves.   

As for the appraiser: sometimes appraisers want to verify the amount of the home price to see if they concur.  This was often the practice several years ago when appraisers wanted to be sure to appraise the property for the agreed upon price. More recently banks have asked for appraisers to give an evaluation based soley on the market value that they evaluate outside of the contract price.  I don't know why the appraiser asked for the lot and parcel number unless he was unable to locate any of the information on the tax records by name and address.  This sometimes happens (but not too often.) I usually make sure that the appraiser has enough information before he or she comes out to the property.  If the appraiser is hired through the bank, the lender takes care of sharing information with the appraiser that they want him to know.  He should not have to see the contract at all.  It is none of his business and certainly should not have to know any of the information other than the legal description of the property to do his job.

I hope that this helps.

Sincerely,
Jessica Bryan
Managing Broker
House to Home Realty Services