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January 26th, 2009 by Temple City Tribune
MORE ABOUT APPRAISERS:
It’s only been a week since submitting the last article of appraisers questions, but with so many more questions, I felt that continuing the subject for another week would be best for those that are now purchasing a property. Yes, sales have been increasing, and it is true that some forty-eight percent (48%) of those sales have been of bank owned properties. The opportunity for first time home buyers has never been better, interest rates are still low, but heed my words, you will see higher interest rates by the end of this year or first quarter of next year.
Q) Before pricing our home we followed our agents suggestion and had a professional appraisal made of our property for proper pricing. The property has been sold, but the buyer’s lender will not accept our appraisal. Why not?
A) For the purpose that you had an appraisal, the figure that your agent advertises may be good for 90 days, but an appraisal is only good for the day that it was completed. A lender will only use an appraiser approved by their lending institution.
Q) We have applied for a reverse mortgage, and the lender required that we have an appraisal made of the property. There were some defects found, and the lender wants us to have those repairs made prior to proceeding with the reverse mortgage, but we don’t have the funds to do so. Is there any way to work around this?
A) Reason for having an appraisal is for the mortgage holder to establish a true value of the property. Defects effect value, and therefore must be corrected before the lender could proceed with the loan. Once repairs are made, the lender will have the appraiser return to the property to update the appraisal. Depending on what repairs are required, you may be able to get the people making the repairs to wait for payment until the reverse mortgage has been completed. Since this question regarding reverse mortgages was brought up, I think that the following question should be answered.
Q) My wife has recently died, and it required both of our social security checks to keep up the payments. I know that our condo is worth $225,000 and the balance is only $80,000. Does that mean that I can obtain a reverse mortgage for $145,000?
A) I am afraid not. The lender will have a professional appraisal made of the property, and will only lend approximately seventy-percent (70%) of the appraised value. In addition there will be costs, amounting to at least six-percent (6%) or more of the amount given. If the appraisal does show that the property is worth $225,000, the amount of the loan would be $157,500, less the amount currently owed ($80,000) less six-percent for obtaining the loan – approximately $9,450.00 – meaning that the total amount that you could receive would be approximately $68,000. It may be best to consult with your accountant, lawyer or family before proceeding.
Q) We are considering purchasing a bank owned home that has a pool. We were at the property to meet the appraiser, and found that the pool was empty of water. The appraiser said that the pool must be filled with water. Why?
A) When a pool is without water, there is a good possibility that there could be cracks that would cause water to leak and cause further problems. It is never a good idea for a pool to remain empty for any period of time, but for the appraiser to require that the pool be with water must be something new. I have left messages for a couple appraisers, but as of this writing I have not yet had an opportunity to confirm the reasoning.
Q) We are applying for a refinancing program, and the appraiser said that since we are only a few blocks from the city boarder line, that he could not use like type properties as a comparison on the other side of the city limits. We don’t understand why?
A) I am a little surprised that the appraiser did not explain that to you. It is very possible that the lender has given specific instructions to this appraiser to only use comparables within the city limits. That may not be the case with all lenders. Normally an appraiser must show like properties within a mile or two, at most, of the subject property.
Q) My appraiser has a copy of our Purchase Agreement. Why?
A) I have asked that question as well, but it seems to be a requirement. Not only will the appraiser have a copy of the Purchase Agreement but will also have a copy of the listing as it appears in the Multiple Listing Service. The appraiser will obtain a copy of the Purchase Agreement from the lender or from your real estate agent. This is to assure that they have the proper property information, and may compare what the property is being sold for and what like properties are currently listed for or have sold within the past six months. This more recent requirement has increased the costs of doing business for the appraiser, meaning cost of materials and supplies as well as time to obtain the information.
Q) How can we be assured that the lender is sending a qualified appraiser to appraise our property?
A) A wonderful question. In the past a professional appraiser could have a number of people working for him/her as trainees, but that no longer is allowed. At most, a busy appraiser could have a maximum of three people training. Appraisers are licensed, require numerous hours of training per year, and the profession would soon require a college degree. If your lender is sending out someone that is not familiar with your area, request that a local appraiser, who is familiar with the area be assigned the work order.
Louis Perlin CRS, GRI is a Syndicated Writer, Author, Professional Real Estate Witness and Mediator. You can reach Lou by calling Marilyn Perlin Realtors, Inc at (760) 327-8401 or by e-mail: firstname.lastname@example.org. Lou is available for real estate office meetings. Lou donates 50% of all monies received from book signings to charity.