Friday, April 10, 2009

Appraisals. Yes, they are still very tight.

Some buyer clients of mine opened escrow on a Burbank house two weeks ago. I received a call from the assigned appraiser this week. She suggested saving my clients the cost of the appraisal by cancelling it, because her preliminary work indicated the house would not appraise for the sales price.

The appraiser told me that the comparable sales indicated the house should sell for $25,000 to $30,000 less than the agreed-upon purchase price. She also informed me that all comparable sales have to be less than 90 days old, and no farther away than one mile from the subject property. This applies to both FHA and conventional loans. And, if the loan amount is over $417,000, there will be a second appraisal, from a different appraiser, prior to closing. She also had obtained a copy of the physical inspection report, and knew that the upgrades to the property would not make up for its physical issues.

Okay, the buyers and I knew the appraisal might be an issue. And we hoped that if that was the case, the sellers would come to their senses and negotiate a lower price with us. They didn't. And our escrow has cancelled.

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