Comps Vs FMA
i have my first deal under contract, financing lined up and everything ready to roll until my realtor says that my fair market analysis comes in at 125k instead of the 150k that i based my deal on!!! the bank said the would need the fair market analysis in order to move forward with the loan.
my question is how does the fair market analysis differ from comps? this same realtor pulled me recent comps when i first had an interest in the house and the numbers supported 150k if not more, with a price of 70 bucks per sq ft. according to the fair market analysis the house is only worth 50-something bucks per sq ft. another thing is the 125k is also the taxed assessed value, and i know that for the most part homes do sell for more than the tax assessed value. and this house is in a very desirable neighborhood, across the street from a lake, and in a good school district.
what is the difference between the two. is the bank expecting the FMA to come in lower than the 150k i told them the house is worth??
any help would be appreciated!!
"Fair market analysis" is not a term I'm familiar with. However, it sounds like a Competitive Market Analysis (CMA) which agents and brokers typically do to estimate property value.
A CMA/FMA is NOT an appraisal, and I don't understand why your lender hasn't ordered an appraisal. Something is not right here. To my knowledge, banks issue loans based on Appraisals.
Furthermore, if I were you, I would get the pre and post-offer comps, sit your agent down, look 'em in the eye and ask the $150K question:
"why did you tell me the property was worth $150K when I expressed interest in the property, and yet now you're telling me it's worth $125K?"
I would also get in touch directly with your lender and find out what's going on here.
i do know that my bank is a small town bank that is investor friendly and will do a 100% loan based on the value of the house. and an appraisal isnt needed just a fair market analysis and a clear termite inspection.
my realtor should have nothing to gain from the price change,. because i negotiated the contract just between me and the seller with no realtor being involved, but if i do purchase i told my realtor i would use him to purchase the home. so i dont think there is any funny business goin on there.
in reference to the above i meant to say my realtor has nothing to gain, but if i purchased the property i would use him to sell it .
Simple solution. LIne up the troops and hold a meeting. Inform all present that you are proceeding on the basis of the figure first given and you expect them all to conform thereto. Being a Realtor (yes I am one) does not endow a person with perfect wisdom and the ability to know at the imediate instant the market price of any piece of property.
Then having got all your eggs in the basket, have them salute and carry on. Away to the bank and negotiate your loan.
Mortals will on occasion fall short in their assigned tasks. You sir are a Real Estate Investor, you must bring them back into line and conformity. The little people expect this from you. Do not disapoint them.
Cheers Lucius
Well, if I were in your shoes, I'd sure like to find out from the agent why in his opinion the value of the property has declined $25K in such a short period of time. And I would like to see both sets of comps--pre-offer and post-offer. And I would want to talk directly with the bank.
ill talk with the realtor in the morning. what do i need to discuss with the bank? there really isnt any communication between them and the realtor, because it is up to me to provide them with the info they need (FMA and termite inspection)
Well, if your agent has already given the bank a copy of the FMA, then I would want to find out if they're willing to accept an amended FMA, but I would speak with the agent first.
no my agent said that he would give it to me first and then i could give it to the bank.. so as we speak now , the bank thinks the prop is worth the 150k that i qouted them.
That's good--gives you the opportunity to avoid the problem altogether with the bank. Then I would just lean on the agent and find out why he thinks the value has dropped $25K so quickly. As I suggested before, ask to see the comps he pulled before you did your offer ($150K) and the comps he is producing now that supposedly support a $125K market value. Good luck with it.