efete1 0 Report post Posted January 26, 2012 Hi all Hope everyone is having a good 2012 so far!! We have another mastermind call in a few weeks; be sure to be on it! I have a question for the seers/mavens/wizards/sage out there: Appraisals and option prices; what to do if the house appraises lower than the option price. I have a tenant/buyer for a house who, now that she moved in and started paying rent a few months ago, now sees nearby houses with lower values, etc. She believes that the house will not appraise for the option price. Not sure, she may be right; who knows in this crazy market. I believe it was priced well at the time (few months back) per my comps. She wants to buy it but is concerned, rightly so, that if the appraisal comes in lower, she won't be able to get a loan. She mentioned that the owner could drop his price, but he doesn' have a lot of room to drop or he'll be underwater. She doesn't want to pay any more into it (she paid 4k of the 5k option fee) and waste it if she can't get a loan. House price (option price) 186K, after option fee and rent credits: 180K, owner owes 176K right now (will owe less by closing time but not that much less of course). I assume there is no point to getting an appraisal now as she is not ready to finance? Not sure how appraisals work, ie would it be voicd if she can't get a loan until the fall? Would the banks want a new one by then? Ideas, suggestions, etc appreciated!! Thanks, Eric Share this post Link to post Share on other sites
pilot76180 51 Report post Posted January 26, 2012 Dear worried one.....I see you called so I'll return your call tomorrow after I take a few aspirin....The problem here is not her concern about the appraisal, but rather, that she owes you $$. If someone is in a house with me, and they are concerned about the appraisal, I tell them that the owner would rather sell it to them or work with them than have it sit empty, but all of that doesn't matter if they can't even get financed yet. I've had a few houses that appraised for under the Option Price, and every time the owner sold at the appraisal value. Having said that, I try to be very realistic on the Option PRice. What you have here is a lady that owes you $1500 or so of the option fee,....which...from this point forward you will NEVER spread out again (right?) and she is worried about the appraisal value. However, she has no freakin clue if she'll be able to qualify, so she just wants to hold the $1500 as ransom essentially. I'e had people in houses that called me and said they were worried about the appraisal. I'd ask Oh, did you get approved for financing?" "No, not yet, we still aren't ready.""Oh...did you have an appraisal?""No, but we saw a house down the street sell for less than this house.""Well, once you are ready for finance the lender will order an appraisal and if it comes in less than the Option PRice we'll get with the owner, but at this point it's a non-issue."Tell her to either pay the $1500 remaining or you'll advise the owner not to release title and she'll lose everything she's put into it anyway, but if she pays at least you all can look to put something together, but she's worried about the appraisal of a house that she can't even purchase yet. 2 Share this post Link to post Share on other sites
<Steve> 82 Report post Posted January 26, 2012 The Naked Investor needs a "LIKE" button. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 27, 2012 The Naked Investor needs a "LIKE" button. Sorry, Steve, but our budget doesn't allow for such extravagences. However, we will make an exception specifically for pilot76180: Sorry. I meant to write, "good post, Johnny". Share this post Link to post Share on other sites
<Steve> 82 Report post Posted February 8, 2012 QUOTE (<Steve> @ Jan 26 2012, 12:05 PM)The Naked Investor needs a "LIKE" button. Sorry, Steve, but our budget doesn't allow for such extravagences. However, we will make an exception specifically for pilot76180: Sorry. I meant to write, "good post, Johnny". Wow! This is a Big change. I was just asking for a Like button. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted February 8, 2012 We aim to please, Steve! I'll be making a post in a few to update all on the board changes. Lots of new bells and whistles. Share this post Link to post Share on other sites
jakeduvall 5 Report post Posted February 8, 2012 Wow. There really is a "Like" button...That was fast. "Waitress can I get some hot wings, a 40oz of Old English, 1 shot of Patron, and an air horn that sounds like a taco truck..." 1 Share this post Link to post Share on other sites
