Sunday, September 14, 2008

The Waiting Game

There is so much activity and rushing around the first 10 days you have a contract on a house that after the option period, you are left saying "What next?"
After the option period you are now "pending". That basically means that all that's left is the appraisal. And when I saw all that's left, that's a really big step. We've seen trends recently because of the mortgage fraud and subprime fallout that homes are getting scrutinzed more. What does this mean for you? Let's say you contracted your future abode for $250,000 but the appraisal only comes in at $245,000. The lender is not going to approve this loan because the home isn't worth what the lender is going to give the borrower. What ends up happening is you have to renegotiate the contract or probably lose the deal all together. There have been instances where the seller believe that his or her is worth more than the silly appraiser thinks and absolutely will not negotiate.
Many times, recently, most of the appraisers are just appraising the house at what the contract is. I find this interesting for two reasons. The first is that it seems to me that most appraisers are just taking the contract price because that's what the buyer is willing to pay for it. It is a personal value to that buyer. The second is they may be just covering their rear-ends since the buyer is putting that value on it so why question it!? I had a listing where the appraisal was scheduled and then cancelled. We questioned why this happened. It was a desktop appraisal so he never even came out to the house. It appraised for the contract price.

1 comment:

Colored With Memories said...

wow, i've never heard of a "desktop appraisal"...learning new things every day!