When the appraisal comes in short

Reblogger Barbara Todaro
Managing Real Estate Broker with RE/MAX Executive Realty 104763
https://staging.activerain.com/droplet/5clY

Good information provided here by Khash for all potential buyers and real estate agents to remember....

Original content by Khash Saghafi Originator NMLS ID 120117

In times when home prices are rising quickly, multiple offers are coming in on a listed property and buyers are having to offer above asking price, it is important to keep in mind the 4 choices which are available to a homebuyer who is obtaining financing:

 

A key thought in the mortgage industry is that the "value" of the home is the LESSER of the purchase price or the appraised value.  In other words, whichever is LOWER (the purchase or the appraisal), that is the number which the lender works the loan off of.

 

In this example, let's just assume that the purchase price is $200,000 and the home appraises for $180,000.  Let's also assume the loan is a VA loan and we are going 100% financing with no money down.  On VA loans, the lender gives 100% of the LESSER between the purchase price or appraised value.

 

In this example, the lender would give the veteran a loan of $180,000.  Even though the purchase price is $200,000, the lender would still only give $180,000.  Now, we have 4 choices:

 

1) The seller comes down to $180,000.

2) The buyer comes up with the shortage ($20,000)

3) The buyer and seller meet somewhere in the middle

4) The entire deal is off (it would be important to notate that a VA appraisal attaches to the home for 6 months.  In other words, if another VA buyer comes along within the next 6 months, then this appraisal of $180,000 must be used.  If a buyer comes in to go FHA, Conventional or USDA, then this appraisal of $180,000 would not be used and an entirely NEW appraisal would be ordered).

 

For questions, additional scenarios or to get your buyers Pre-Approved today -- call me at 1-216-780-1103.  I am not only a loan officer, but I am also an underwriter who owns the company and is a direct lender for VA, FHA, USDA and Conventional.

 

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Rainmaker
2,600,106
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker

Good morning Barbara. Good choice for a reblog! Enjoy your day!

May 19, 2018 05:16 AM #1
Rainmaker
47,726
Khash Saghafi
Liberty Home Mortgage Corporation - Cleveland, OH
Mortgage Loan Officer, Cleveland Ohio

Thank you so much for re-bloggin Barb!!! Hope you have a great day!!

May 19, 2018 05:30 AM #2
Rainmaker
2,732,995
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce - Short Sale

It can be all about the compromise that is a part of real estate !

May 19, 2018 06:12 AM #3
Rainmaker
4,552,751
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Thank you very much, Barbara, for sharing this reblog selection.

May 19, 2018 06:46 AM #4
Rainmaker
4,213,792
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

Thank you everyone for your nice comments... Khash Saghafi always provides quality content and great motivational posts, also.....I'm a follower....

May 19, 2018 07:06 AM #5
Rainmaker
1,497,420
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Barbara - this bog really spells it all out.  It was a great one to re blog. 

May 19, 2018 07:14 AM #6
Rainmaker
916,725
Carol Williams
U.S.: I specialize in helping agents who have been in the business 2 years or less create a thriving business. - Wenatchee, WA
"Customized Mentoring & Marketing Services"

Hi Barbara,
Good choice for a reblog.  Might be a great option to include in SCS. 

May 19, 2018 07:40 AM #7
Rainmaker
3,549,307
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Great info on this re-blog.  The issue of a VA loan is tough because if you do improvements after the appraisal, it still stays the same.

May 19, 2018 07:54 AM #8
Rainmaker
335,436
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

Barbara, even when you re-blog you choose value added material for the benefit of us all.

Thanks for sharing.

May 19, 2018 08:36 AM #9
Rainmaker
4,213,792
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

Grant Schneider I've never read one by Khash Saghafi that was not reblog worthy and many featureworthy....

Carol Williams I'd love to see this in the second chance Saturday post.... it's worthy, for sure...

 

May 19, 2018 09:03 AM #10
Rainmaker
4,213,792
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

William Feela there are many well-versed mortgage officers here, and Khash Saghafi is on that list...

John Wiley I learn something from Khash with every post.... members would be wise to follow him...

May 19, 2018 09:05 AM #11
Ambassador
3,450,673
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Barbara when properties do not appraise for the selling price it produces interesting negotiations.

May 19, 2018 03:13 PM #12
Rainmaker
4,213,792
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

fortunately, we haven't had any issues with appraisals, but it's inevitable if prices continue George Souto 

May 19, 2018 03:17 PM #13
Rainmaker
2,407,270
James Dray
Fathom Realty AR LLC - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Barbara.

We have experienced very few issues with appraisals around here.  They happen, but they are rare

May 20, 2018 01:44 AM #14
Ambassador
2,479,638
Debe Maxwell, CRS
www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Barbara! Another great choice for a re-blog. We are seeing more and more sellers listing only for conventional or cash buyers in an attempt to avoid this exact scenario. It's sad because all VA appraisers are not coming in low in our area but, as always, a few bad apples have caused everyone to be on high-alert!

Happy Sunday!

May 20, 2018 09:43 AM #15
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