The High Road Papers - Latest Comments in Multiple Offers and Appraised Value: Be Aware

Re: Multiple Offers and Appraised Value: Be Aware

Portland Real Estate — Fri, 28 Aug 2009 14:00:44 -0000

Thats a hyper local thing too, Portland is not experiencing the same thing at the moment, but we have been there before. I guess it is just your time right now.

-Tyler

Re: Multiple Offers and Appraised Value: Be Aware

JoeLoomer — Fri, 28 Aug 2009 12:52:05 -0000

Hopefully FHA dumping the HVCC will help resolve the appraisal issues.

We really don't face these situations in my neck of the woods, at least not in terms of the percentage differences you speak of (50,000 below contract)...

Re: Multiple Offers and Appraised Value: Be Aware

ChuckG — Fri, 28 Aug 2009 09:34:38 -0000

Hey Jay!

Thanks for the clarification. We actually have two different purchase contracts that are used in CA. One has a specific clause about the appraisal (like AZ) and the other doesn't. Just needed to make things even more confusing I guess! (Maybe that's why there are so many lawyers in CA??) :-)

Re: Multiple Offers and Appraised Value: Be Aware

Jay Thompson — Fri, 28 Aug 2009 01:14:13 -0000

Hi Molly - it can be VERY frustrating, hang in there. Here's a post I wrote back in April that may provide some things to think about when it comes to making an offer on a home. Price is important, the most important factor, but it is NOT the only factor:

Making an Offer on a Phoenix Home -- It's not all about the Benjamen's

Good luck in your home search and don't give up!

Re: Multiple Offers and Appraised Value: Be Aware

Jay Thompson — Fri, 28 Aug 2009 01:07:29 -0000

Hey Chuck! In AZ, it's pretty clear. The standard AZ residential purchase contract has this appraisal contingency:

Appraisal Contingency: Buyer’s obligation to complete this sale is contingent upon an appraisal of the Premises by an appraiser acceptable to lender for at least the sales price. If the Premises fails to appraise for the sales price, Buyer has five (5) days after notice of the appraised value to cancel this Contract and receive a refund of the Earnest Money or the appraisal contingency shall be waived. (my emphasis)

So here in AZ, it's not tied to the loan at all. Theoretically a buyer could cancel if the appraisal came in $1 low...

Just goes to show real estate law, contracts and practice are local and people should ALWAYS consult with a local professional.

Re: Multiple Offers and Appraised Value: Be Aware

Molly — Fri, 28 Aug 2009 01:01:08 -0000

Thank you for writing this piece! I would love a little advice on how to be a bit more effective in dealing with this situation... I'm trying to buy right now, and surely not over extend myself. My budget is $120k and I've been looking at the homes around $95-105k to be able to offer slightly higher to stay competitive (which we learned the hard way is absolutely necessary at this point). We're on our sixth offer and getting really discouraged. How is the average person supposed to buy a home right now when competing with these cash buyers? The normal working person doesn't have $120,000 in cash sitting around! My heart got absolutely broken at this most recent loss, and I feel like there has to be a better way. Can you give me any insight as to how we can be more effective with putting in offers to the bank?

Re: Multiple Offers and Appraised Value: Be Aware

ChuckG — Fri, 28 Aug 2009 00:40:19 -0000

Funny, I just made basically the same observation, but from a different direction on my site http://whiteoaksblog.com/20...

One point of correction (at least as it applies in CA) ... just because the appraisal doesn't come in at value, it's not automatically a reason to cancel the contract. The way I understand it, you can only use the lower appraisal as cause or cancellation IF it results in you not getting the loan you committed to in the contract. The difference being with large down payments (and consequently lower loan values) a lower appraisal may not necessarily make a difference in your loan.

Great points, though....it's happening everywhere -- not just in AZ!

Re: Multiple Offers and Appraised Value: Be Aware

craigballhagen — Thu, 27 Aug 2009 23:11:25 -0000

Buyers need to be able to roll up their sleeves and get ready for a long process. I have had a byer put an offer in last Feb and now it is finally going to close. I am surprised that they could hang for so long. good luck and keep blogging

Re: Multiple Offers and Appraised Value: Be Aware

justinmchood — Thu, 27 Aug 2009 23:07:14 -0000

@Tyler,
Thanks for your comment -- after listening to two different loan officers tell me that "their files weren't having these problems" this morning at #evtm at Liberty Market in Gilbert, I was kind of wondering if I was the only one seeing this.

So if nothing else, you are helping me know that I am not alone in seeing this.

@gar62
Great point about the market being hot in the under-200k and chilly in the higher priced market. Thanks for the comment!

Re: Multiple Offers and Appraised Value: Be Aware

gar62 — Thu, 27 Aug 2009 16:15:24 -0000

If so many houses are going to cash buyers, that suggests investors are big players in the market again. The average person that wants to buy and live in a $200k house doesn't have that laying around in cash. And if it's investors, then when they decide to put their money elsewhere, everyone sells and we have another crash. Data I saw from July 2009 shows monthly sales of 7000 which sounds great, but 5600 are houses priced $200k and under. Average selling time of houses over $200k is 8 months. So that part of the market is still dead.

Re: Multiple Offers and Appraised Value: Be Aware

Tyler Wood — Thu, 27 Aug 2009 15:38:35 -0000

I have seen all of this in the past month - multiple offers, low appraisals, desk reviews cutting the values. It's a new market out there. AMC's and the new HVCC has a lot ot do with it as well.

This is good info, thanks.