My Day From Hell: Appraisal Issues in San Carlos and the Surrounding Cities

Posted on 19 April 2010 by vvandervort

fire backgroundWatch out… appraisal issues in San Carlos and the surrounding communities are a real possibility right now.  A week ago today, I got a phone call from a mortgage person that I work with from Bank of America and received the terrible news that a home in Belmont that my buyers were in contract on, had the appraisal fall short.  And it wasn’t short by just a small amount, it was a BIG amount – over 9%!  To me, it appeared that the appraiser didn’t even look at higher sales to make the appraisal work.  One interesting thing, was that there were 5 offers on this property and there was another offer on the property that was pretty much the same as my buyers’ offer.  Of course, appraisers don’t have a way of using that information in their appraisals.

Bank of America does has a path to follow for disputing appraisals, but the time line for that was uncertain and my buyers were to remove their financing contingency on Friday.  We had three options.  We could wait and see if we could get new information(sales that were about to close) to the appraiser to increase their appraisal amount or we could do what we call a Double or Dual App or the buyers could just back out.  The buyers went for the double app because they really want to buy this home.

In a double app, you apply for a loan through a 2nd lender.  I have just one lender I go to when the shit hits the fan and it is Princeton Capital.  They have an amazing track record of keeping deals together that otherwise would have fallen apart.  My buyers did an amazing job of getting all of their financial details to Princeton Capital in a matter of hours on Monday afternoon (and if  you’ve been through the loan process lately, you know that is a huge feat).  On Tuesday, I got a phone call from the appraiser who thankfully lives in Belmont and understands our local market (some appraisers come in from east bay counties and do not understand our market) and we set up an appointment to meet at the property on Wednesday morning.  I left our appointment on Wednesday morning feeling pretty confident since the appraiser said to me that he does his homework before he goes out to a property for the appraisal and if he doesn’t think he can get a property to appraise, he calls the agent before he even goes to the property.  As a proactive agent, I love another proactive person.  Within 24 hours, I got word that the appraisal came through at the purchase price.  Right now, we are on track to close this deal on the same time frame that we were on before switching lenders – which means that from loan application to closing will be 18 days!

Buyers and sellers do need to be aware that appraisal issues are out there right now in San Carlos and the other mid-peninsula markets.  Our market has changed fairly rapidly and with the appraisal rules that are in place, it is no surprise that this is occurring.  Appraisers have to have 2 sales within the last 90 days that are within a mile of the subject property.  If they cannot find anything within 1 mile they can go out to 2 or 3 miles.  The appraiser also needs to use 1 pending and 1 active.  This is important information for sellers to be aware of when pricing their home and looking at offers.  Although the highest offer looks the most attractive, you have to weigh whether or not the home can appraise for that price.  As a seller, you certainly don’t want your transaction to fall apart 7 to 10 days into the transaction since you will have lost a lot of momentum.

Got questions? Contact Val, the San Carlos data gal!

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