Trying To Get On The Right Track
I am a newbie to this area of investing and I am looking for some direction. I have read a few articles on this subject . I know one R.E. broker and one banker. They really are not sure about this area of investing so they really could not answer my questions. I was doing rehabbing for a while but it got to be too time consuming and stressful. So I am trying to get on the right track. ( no more lifting of material and my body hurting at the end of the day). Got any suggestions
thank you for that response. It is amazing that everything that you said is what I am already in the process of doing. The paying off old debt and clearing up matters on my credit report is what will take a little bit of time. All that you said is great advice and I will "just do it " with sound dicipline and focus. R.E. investing does pay off well that I do know. I have learned so far that you must be patient with yourself, read, study, apply, and network. This has helped me gain my first house (in which I currently live in). I had to prove to myself that I could negotiate a deal for my our personal use. Much continued success to you and all others
[addsig]
the appraisal should reflect what has sold in the market area and how the subject house compares with those sales. My appraisals always list the subject house, then recent sales (usually 6 month window) and compare the two houses line by line. I just had a house appraised where the purchase price was $75k and the house appraised for $103K. Because similar houses in the neighborhood sold for that amount.
But, I also had an appaiser just tell me that if he has a house that recent sales show should appraise for X and the purchase price of the house is just a tad higher, he will find a way to make the appraisal higher, so sometimes the appraiser knowing the purchase price can help you. Just my thoughts.
My particular situation is that I have an REO that I am purchasing as an investment. I was able to negotiate the price down to about 80% FMV (per my comps with other properties in the neighborhood). Speaking with my broker, we were able to obtain 100% financing approval from a lender based in part on this spread.
However, the appraisal came back only $2K higher than the agreed purchase price because the appraiser said the house is in a "soft and declining market". This threw a red flag to the underwriters and they rejected the loan at 100% and now say we need to put down 15 - 20% for them to approve the loan.
We are thinking of challenging the appraisal but the bank has already indicated that they will not accept any other appraisal so it might not even be worth paying for another one. All this a few weeks before closing so I am now scrambling to find another financing source to close the deal.
I truly believe that if the appraiser did not know the purchase price of the home, they would have come back with an appraisal value more in line with other properties that had sold in the area. Maybe this is just wishful thinking on my part.
Thanks.
JS.
I also agree with the original post...it just does not make sense for an appraiser to know what the contract price is. I would also take it a step further...I do not believe that the appraiser should know the last purchase price and date (although I know this is public information). Supplying them with this information just does not give a true indication of property value...it is kind of like a teacher handing out the answer sheet with the exam. It is a scam in my opinion.
rmdane,
Sorry if I sounded disrespectful there. I appreciate your suggestion and did not mean to be flippant or disrespectful to you in any way.
Please accept my apology and thanks for your contribution.
JS.
Appraisers usually use bland boilerplate in their appraisals. When an appraisal states "soft and declining market" that radioactive statement is going to be noticed by the underwriter.
When I appraise a property, if the data shows the house is worth $20k more than the selling price, I will appraise it for $20k more than the selling price. I just make sure my data is accurate enough to defend my appraisal in court (should the need ever arrive).