Posted by Jonathan Mednick on October 15, 2003 at 08:56:05:
Bank won’t accept anything other than their own appraisal. already tried this. thanks for offering your advice.
Been doing short sales for about a year. a little bit more work than usual but sellers are motivated to avoid foreclosure. i recently bought a house for $110K, am into for $130K right after rehab and i have it on the market for $199K. Should sell around $192K.
jonathan
FHA SHORT SALE - Posted by Jonathan Mednick
Posted by Jonathan Mednick on October 03, 2003 at 22:38:58:
Ok, here’s the deal. I do quite a bit of short sales and just hit a bump in the road with my latest one.
I’ve got all the paperwork submitted to the bank and they sent their appraiser out to the house. I met the appraiser and told her all the problems with the house. I estimated $25-30K in repairs (really, it is $15K max). Appraiser sent it back to the property at $96K AS IS condition with $23K in repairs.
Now, I found out that because it is FHA, the repairs can’t exceed 10% of the AS IS appraised value, in this case the appraisal came back at 20% above it.
So, the bank said if I can get the appraisal to come down on the repairs to under $9600, then they would discount the property 18% and sell it to me for $78,720.
So, if I can get the appraiser to do this, after I close, I would be into the house for about $87K (I pay buyer/seller closing costs plus $1500 cash to the seller, outstanding liens, et.). $20K of renovations and holding it. Another $3K in closing when I sell it puts me roughly at $110K. I can sell this property easily for $130K.
BUT, when I spoke to the appraiser, she won’t come down on the repairs because she doesn’t want the responsibility. Even though I said I as buying it as is and it is a cash deal, she won’t do it. The only way she would is if she got something in writing from the bank stating she wouldn’t be held responsible.
Haven’t yet called the bank rep back but does anyone know how i can diplomatically put it to the bank.
hate to lost a deal over something so small as this.
Any advice, greatly appreciated.
Best,
Jonathan
Re: FHA SHORT SALE - Posted by TheShortSalePro
Posted by TheShortSalePro on October 04, 2003 at 08:09:58:
What type of FHA insured mortgage loan is it?
Re: FHA SHORT SALE - Posted by tony
Posted by tony on October 04, 2003 at 06:05:50:
(Now, I found out that because it is FHA, the repairs can’t exceed 10% of the AS IS appraised value, in this case the appraisal came back at 20% above it…jonathan)
This makes no sense. Why would the bank, holding the FHA paper care what the repairs are?
Re: FHA SHORT SALE - Posted by Jonathan Mednick
Posted by Jonathan Mednick on October 05, 2003 at 11:32:36:
Not sure this has any relevance here. Why would this matter?
jonathan
Re: FHA SHORT SALE - Posted by TheShortSalePro
Posted by TheShortSalePro on October 05, 2003 at 11:53:37:
“Now, I found out that because it is FHA, the repairs can’t exceed 10% of the AS IS appraised value, in this case the appraisal came back at 20% above it.”
If the loan in question is an FHA 203K, that would be different from, and could have different loss mit criteria than would a 203B. I asked about the loan type so that you would be able to research the program, and perhaps discern a solution to your problem. A key to negotiation is the transfer of information.
Re: FHA SHORT SALE - Posted by Jonathan Mednick
Posted by Jonathan Mednick on October 05, 2003 at 20:38:15:
This is what I am trying to find out. Do you know where I can get this info from? Any other site? Any info I could use in my next round of discussion would be greatly helpful. Please advise.
Thanks,
Jonathan
Re: FHA SHORT SALE - Posted by jafon
Posted by jafon on October 07, 2003 at 09:02:46:
Maybe bypass the appraiser and get a contractor’s estimate on the repairs with their explanation of material/methods they intend to use to reduce the cost to the $9600 needed. Like instead of replace windows at $200 per pop maybe repair broken panes for $30. Cheap carpeting or sanding instead of new wood flooring, etc. Contractor can give you a side by side estimate. One column totaling to the appraiser or higher estimate value and the other column with the lower cost solution. It would readily handle any challenges or questions as to how the figures were arrived at. Be careful though because the bank may later use this method against you to challenge your future submissions with high repair estimates.
Hope this helps. If it does, tell me about your short sales and how you got started in it.