AboutJim Root Expertise Although not currently a licensed Real Estate Agent, Appraiser or Mortgage Banker, I have some 30 years as a "Real Estate Professional" having worked some 20 in these areas and a "decade plus" a Govt. Realty Officer with HUD's FHA Homeownership Division. As an "Independant Third Party" with no motives other than to provide free help to members of the public with their Real Estate experiences, I can answer questions about purchase & sales, appraisal/valuation & financing of Real Estate. Gale, shown with me here has been a Realtor,Real Estate Office Administrator & my Research Assistant over the years!
Experience Private Sector: 5 Years as Real Estate Marketing & Sales Specialist,
5 years as Residential Real Estate Appraiser,5 years as a Mortgage Company Manager & Senior Loan Officer.
Public Sector:12 years with the Dept.of Housing & Urban Development's FHA Division, serving as Ass't Chief,HUD-Owned Property Sales Branch for the Alaska Jurisdiction; Chief Appraiser for the Eastern Washington/Northern Idaho Jurisdiction & as a Senior Home Ownership Program Officer, qualified in Valuations, Credit Underwriting, Construction Analysis & Foreclosed Property Disposition for the FHA Homeownership Center responsible for 8 State-wide Jurisdictions.
Organizations Formerly a Member of National association of Realtors (NAR) & Mortgage Bankers Association of America (MBAA). Currently with the National Association of Review Appraisers & Mortgage Underwriters(NARA/MU).
Publications Has published articles in local, state & national publications on a variety of Real Estate-related topics, as well as co-authoring of numerous HUD/FHA Manuals, Directives & Policy Memorandum over the years.
Education/Credentials AA Degree, with Real Estate Emphasis,
BA Degree in Mass Communications,
MA.T Degree in Teaching/Education
Awards and Honors Holds the following Professional Designations:
CRO (Certified Residential Originator)
RMU (Registered Mortgage Underwriter)
CRA (Certified Review Appraiser)
Past/Present Clients Currently semi-retired, teaching Real Estate Night Courses at local Community College, doing Mini-Seminars & Workshops with local-area Real Estate Professionals, and providing Consulting & Inspection Services to local Mortgage Lending Companies & their Clients.
Expert: Jim Root Date: 7/16/2008 Subject: HUD property bid over appraised value.
Question I found a HUD property to purchase and occupy. Listed at $100,000. I made bid at $85k, (rejected), second offer at$95k accepted. I went to local lender and was prepared to go "Conventional" (20% down). Appraisal came back at $85k. Lender now says it will not lend on home over $85k. I still want the property. HUD says their appraisal of $113k in April,08 is a good six month value, while the bank appraiser and I feel it's overvalued. I want the property, but don't want to over pay. How do you convince HUD to review appraisals, or order new appraisal?
Answer SALLY--
Let me see if I've got this straight! HUD appraises the property at $113,000 about 3 months ago & then lists it at $100,000? (This is "strange," as typically HUD lists their "Homes-4-Sale" at the FAIR MARKET VALUE established by THEIR Appraisal!)
Then you make a couple of "Low Ball" Offers, with the 2nd one, at $95,000 being accepted by HUD.( NOT strange, as HUD often accepts between 10-to-20% less than their List Price after a property has been on the market for more than 10 days!)
Next step, as you're going Conventional & the HUD Appraisal isn't acceptable to your Bank, they call for ANOTHER Appraisal--and their Appraiser brings the property's value in at $85,000! Now your Bank is limiting your Loan Amount to one based on the $85,000 Conventional Appraisal.
Thiis certainly makes one question "JUST WHAT IS FAIR MARKET VALUE OF THIS HOME? Two State-licensed or Certified Residential Appraisers, both I'm sure with the experience, skills and knowledge required to do a CREDIBLE "opinion of Value" have DISAGREED on a SPECIFIC value--but seem to "formally" agree that the Home falls into a VALUE RANGE of from $85,000 to $113,000; Or $85,000 to $100,000 considering their LIST PRICE; OR $85,00 to $95,000 considering the price they Accepted! WHAT A MESS!
Unless you willing to convert your Loan Application from Conventional to FHA, and go with the HUD Appraisal that exists,perhaps even taking the Loan Application to ANOTHER Bank or Mortgage Company, I SUSPECT you may lose this property! If you do that, and your purchase price is $95,000 will you be "overpaying" for the home? Maybe, but I 'd make an "educated guess" that you wouldn't be overpaying by MUCH if ANYTHING.
Looking at the Appraised values, List Prices, Accepted Offer Amounts and VALUE RANGE(S) these "Clowns" have established tells me that the property is very likely worth between $90,000 and a Hundred Thousand Dollars. So,if you really want the house,his may be your best option!BUY IT FHA(?)
You asked about getting FHA to review the Appraisal (for Reconsideration of Value?) or to allow for a NEW Appraisal! DON'T HOLD Your BREATH! HUD/FHA considers that the Appraisals done by those on their FHA Appraisal Roster are FINAL and unless there's suspicion of Fraud or Abuse, Criminal Negligence or Incompetence, etc, and that suspicion is "backed up" by some "evidence,"they are NOT willing to authorize a "Do-over!"
The only slim chance you've got of getting any Appraisal Review, Reconsideration OR Replacement from HUD/FHA would require your Lender's FHA Direct Endorsement Underwriter AND the FHA Roster Appraiser to provide the FHA Homeownership Center with a formal REQUEST for RECONSIDERATION of VALUE.This formal request would need to include data NOT used by the FHA Appraiser that justifies the value placed on the property by the Conventional Appraiser. THE CHANCES OF HUD/FHA's ACTUALLY CHANGING THEIR ORIGINAL VALUE DETERMINATION IS EXTREMELY L-O-W !
Good Luck, Sally! Please let me know how you proceed with this--and the results!
