Controlled Chaos Posted May 30, 2006 Share Posted May 30, 2006 A friend of mine is selling his condo. The buyer signed a contract to buy the place for 141,000. The bank then appraised it at 137,000 and said they will only give her a loan based on that amount. The reason I don't understand this is, the buyer is putting down 10% which is about 14,000. So they are really only borrowing 127,000. If the house appraised for 137,000 why does the bank care. If the buyer happened to defualt on the loan they will get their 127 back. Can someone explain this to me....SLOWLY? thanks Quote Link to comment Share on other sites More sharing options...
Steff Posted May 30, 2006 Share Posted May 30, 2006 The selling price can not be more than the appraised value? But the appriased value can be more than the sale price? Not sure why for sure, but maybe something to do with insurance. So, slowly, cause the bank said so. Quote Link to comment Share on other sites More sharing options...
southsider2k5 Posted May 30, 2006 Share Posted May 30, 2006 The downpayment doesn't matter. The bank can't legally be involved in a mortgage where the purchase price is bigger than the appraisal. Quote Link to comment Share on other sites More sharing options...
RockRaines Posted May 30, 2006 Share Posted May 30, 2006 QUOTE(southsider2k5 @ May 30, 2006 -> 02:07 PM) The downpayment doesn't matter. The bank can't legally be involved in a mortgage where the purchase price is bigger than the appraisal. Correct. And really, you shouldnt be buying a place which is appraised lower than your buying price unless you are planning on flipping or tearing it down. Quote Link to comment Share on other sites More sharing options...
Controlled Chaos Posted May 30, 2006 Author Share Posted May 30, 2006 QUOTE(RockRaines @ May 30, 2006 -> 02:09 PM) Correct. And really, you shouldnt be buying a place which is appraised lower than your buying price unless you are planning on flipping or tearing it down. Thanks all! Well my friend was the seller and he was pretty psyched he got 141,000. The rest of the condos were sold around 138 or 139. He was pretty pissed that the banked bunked the deal. I couldn't figure it out, so I came to the soxtalk crew. Quote Link to comment Share on other sites More sharing options...
southsider2k5 Posted May 30, 2006 Share Posted May 30, 2006 To be honest I am kind of shocked, because usually the banks will "appraise" the property to make sure the mortgage gets done, even if they should not do so. Most appraisers are in bed with the banks so they kept getting used (ie paid) and they give the banks whatever they are looking for. Quote Link to comment Share on other sites More sharing options...
RockRaines Posted May 30, 2006 Share Posted May 30, 2006 QUOTE(southsider2k5 @ May 30, 2006 -> 03:27 PM) To be honest I am kind of shocked, because usually the banks will "appraise" the property to make sure the mortgage gets done, even if they should not do so. Most appraisers are in bed with the banks so they kept getting used (ie paid) and they give the banks whatever they are looking for. usually you can sway the appraiser one way or the other, especially if he is teamed with the lender, or the broker. Quote Link to comment Share on other sites More sharing options...
Controlled Chaos Posted May 30, 2006 Author Share Posted May 30, 2006 So basically you can't make a killing on your house, cause the bank can come in and be like...NOPE it's not worth that much. Quote Link to comment Share on other sites More sharing options...
RockRaines Posted May 30, 2006 Share Posted May 30, 2006 QUOTE(Controlled Chaos @ May 30, 2006 -> 03:48 PM) So basically you can't make a killing on your house, cause the bank can come in and be like...NOPE it's not worth that much. You can, you usually just have to have an appraiser on your side. Also, they usually tend to over value homes, at least in chicago. Quote Link to comment Share on other sites More sharing options...
southsideirish71 Posted May 30, 2006 Share Posted May 30, 2006 This is based on the comps that the appraiser used to define your value. Maybe the appraiser can list the comps he used to appraise the condo and see if they are a true representation of your market value. If you can find condos in the same complex that went for about that price you are okay. But if everything in that complex is lower then you will have a problem. Quote Link to comment Share on other sites More sharing options...
Steff Posted May 30, 2006 Share Posted May 30, 2006 QUOTE(southsideirish71 @ May 30, 2006 -> 05:03 PM) This is based on the comps that the appraiser used to define your value. Maybe the appraiser can list the comps he used to appraise the condo and see if they are a true representation of your market value. If you can find condos in the same complex that went for about that price you are okay. But if everything in that complex is lower then you will have a problem. ^^, agree. I, like Mike, have never seen this happen either. I got 6K more for my townhouse than my old neighbor.. she sold 4 months previous to me. 6K in 4 months.. not a snowballs chance in hell, but the bank said so because some newer, more expensive, townhouses had just closed. When we refinanced our current home we almost had real trouble.. We had built the most expensive house in the neighborhood interior wise and then finished the basement and added a deck and pool. The value was faaarrrr from what was around here. Our savior was that they had just approved multi-million dollar houses and 5 lots had sold. They needed 3 to compare it to. We lucked out big time otherwise the refi would have been a no go. It's a crap shoot. Quote Link to comment Share on other sites More sharing options...
Rex Hudler Posted May 31, 2006 Share Posted May 31, 2006 You sure as hell can pay more for a place than it appraises for. That happens all the time, especially in California. If their mortgage required 10% down, they would require 10% of the $137k + the additional money to make up the difference. There are definitely ways around it. In fact, I sold my first townhouse for $124,500 and it only appraised for $121,000. The sale price was never an issue. The sale price could be double the appraised value if that is what the buyer is willing to pay. The key is, they will have to come up with the funding above the appraised value. Quote Link to comment Share on other sites More sharing options...
Buehrle>Wood Posted May 31, 2006 Share Posted May 31, 2006 I saw the word condo and felt like plugging ownacondo.com. Quote Link to comment Share on other sites More sharing options...
Steff Posted May 31, 2006 Share Posted May 31, 2006 QUOTE(Rex Hudler @ May 30, 2006 -> 10:54 PM) You sure as hell can pay more for a place than it appraises for. That happens all the time, especially in California. If their mortgage required 10% down, they would require 10% of the $137k + the additional money to make up the difference. There are definitely ways around it. In fact, I sold my first townhouse for $124,500 and it only appraised for $121,000. The sale price was never an issue. The sale price could be double the appraised value if that is what the buyer is willing to pay. The key is, they will have to come up with the funding above the appraised value. I don't think anyone said it's never happened - and as Mike pointed out usually the appraiser does whatever he can to claim the value at where it needs to be. Though even if it does come in low, it's a hurdle that apparently some banks are willing to overlook. http://homebuying.about.com/cs/appraisals/a/real_estate.htm If the property appraises lower than the sales price, the loan might be declined, but that isn't the only hurdle it must pass. There's info at the link specifically if it does come in low.. If the Appraisal Comes in Low Don't panic if the appraisal comes in low, because there are often steps you can take to make the deal work. If the appraisal uncovers other problems, remember that most problems are correctable. Try to keep your cool and work through issues one step at a time. Quote Link to comment Share on other sites More sharing options...
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