selling your house with no "comps"

Sparticle · #21 03/13/07, 09:24 AM

Quote:

Originally Posted by fantasymaker

Tell the aparazer to get off his butt and go find a comparable property he might have to drive more than 10 miles!

I think that might make it even worse. I just don't know.

Sparticle · #22 03/13/07, 09:28 AM

Quote:

Originally Posted by SteveD(TX)

Problems like this are the reason that there are 3 approaches to value, not just one like some underwriters like to think. Sometimes the Cost Approach is more reliable than the Sales Comparison Approach, esp. if the house is relatively new. If there are plenty of land sales in your immediate area, the house is not very old, and there are no "good" comps in your immediate area, the appraiser should lean more heavily on the Cost Approach. The problem is, underwriters tend to hate this, and Fannie Mae and FHA guidelines also disfavor doing this, despite the fact that it may be the most reliable indicator of value in some instances.

The last appraiser also did the cost approach which of course gets the appraisal much higher. The buyer's agent has presented this to the lender and they have sent it to underwriting. The appraiser also included a great shot of my land and home and horrible shots of the "comp" homes. He made a great argument in the appraisal but he also told me that he's pretty sure the bank is just going to use the comp appraisal and not the cost approach. I was happy he did the other one as well though. I should hear back soon. But, the agent and the loan officer at the bank said they seriously doubted it would be approved.

Sparticle · #23 03/13/07, 09:30 AM

Quote:

Originally Posted by SteveD(TX)

What part of TX are you in?

between Brookshire and Sealy

fantasymaker · #24 03/13/07, 09:33 AM

Some times ytou have to do the work that others should be doing. So why dont you go find a few comparable places. One place to start might be with your buyer I bet they looked at simular but not quite as good places so why not ask them what they thought were areas with homes like yours?
In any case get out and give it a shot you might have to travel a long ways looking for comparables but in the end you have to remember there is no place exactly like yours except yours!

SteveD(TX) · #25 03/13/07, 09:38 AM

Unless the Cost Approach is not relevant (apparently not your case), the appraiser MUST do one. Unfortunately, many appraisers give the approach very little weight since underwriters don't like it. Also, too many appraisers tend not to support their land value in the cost approach since the form doesn't have a place for the land comps. However, standards (USPAP) requires that appraisers must support their land value estimate. You might ask that he submit the land comps used in the land value estimate in the Cost Approach to the lender in an addendum. If it has been established that land values are a lot higher in your neighborhood than the land values near the comp sales in the Sales Comparison Approach, then the appraiser can use this differential as a basis for adjusting the comps for location.

Unfortunately, in the long run, this may do little to help your situation. Lenders tend to look at areas with no "good" comps as a higher risk, and the appraisal no matter how well done, is generally less reliable.

EDIT: Let me also add, that as the seller, you are supposed to be completely out of the picture when it comes to the appraisal and the loan process. Of course, you can hire your own appraiser and tell him anything you want.

65284 · #26 03/13/07, 10:39 AM

The best thing to do, if you are in a position to do it, is set what you think is a fair price and carry the note yourself. We ran into the same problem when we sold our previous home several years ago, the lenders in the area didn't want to loan what the place was worth so we financed it for the buyer. Worked out great, and made us a lot of extra money in the long run.

citilivin · #27 03/13/07, 10:43 AM

As I said previously, I would look outside the traditional lender. I would check with a loan broker that specializes in rural properties and would have a better understanding of this situation. Traditional lenders have a difficult time looking "outside the box". I have never had an assignment that could not be appraised. The lender must be familiar with this type of assignment.

donsgal · #28 03/13/07, 12:27 PM

Quote:

Originally Posted by quntmphscs

I had a contract pending on my house. now we are running into the problem with 2 appraisers saying there are no comps. the closest they can find is 10 miles away where the land is worth $5,000 per acre. in my area it's $13,800 per acre. The property they used for comps is in an area with no trees and in an area with mechanic shops and run down homes etc.. My land is full of trees in a gorgeous area with 80 foot high pecan trees. You can't even compare the two areas, they are only 10 miles away but might as well be 1,000 miles away they are so different. So they used that property 10 miles away to come up with the comps for the bank.

so now it looks like the sale won't go through. the cost analysis method, of course, shows a much higher appraisal. BUt, the buyer's bank won't use that. The appraisers both said the banks use comps only traditionally.

any ideas?

Your realtor should have done some comps when the house was listed for sale. Send those to the appraiser. You can also hire an independent appraiser to do this for you for a fee. I'm sure you can challenge the lender's figures if you have enough hard evidence of your own to back you up. In areas where there are few comps, you often do not have a choice other than to take and use what is available. There are formulas which modify the price based on variables such as condition, proximity to businesses, etc. These variable should have been taken into consideration.

Nowhere is it written that trees increase the value of property. Quite the contrary, they can be a liability because they must be cleared if property is going to be developed and it is an additional cost to the developer. Likewise, some people consider being in a more populated area, rather than really far out in the country a benefit for reasons of community services, (fire department for example), as well as distance to travel to stores, etc. Even though the houses may be less desireable in your opinion, there could be mitigating factors. And again, you could just have an unrealistic idea of what your land is worth because of an emotional attachment that you have to it.

donsgal

quietstar · #29 03/13/07, 01:39 PM

Jamie...You have some fine folks and sincere professionals like Steve trying to understand your problem and offer good advice. I think its unfair to avoid revealing the important fact that your home is a manufactured doublewide in a market place that reflects an uncomfortable depreciation rate. It is showing up in the available comparable sales and it's unreasonable to think conventional home sales can be used. I'm glad you found a buyer willing to pay your price. Some clients in your position have chosen to take back a Vendors 2nd rather than lose a strong buyer. As always, The lending underwriter is the key to closing any loan. Good luck ...Glen

quietstar · #30 03/13/07, 01:52 PM

Donsgal....QP doesn't have a Realtor and has done a surpurb job of marketing her own property. The fact that she appears to have found buyers willing to pay well above indicated market value confirms her hard work.Trying to help, I advised her of the hard facts about comparable sales months ago. The Market Place don't care how much we paid or how much we need....Glen

Jim S. · #31 03/13/07, 02:21 PM

Wow...$13,800 an acre? Holy moly! That's a lot of cabbage. We're talking on a multiple acre parcel, it's that high? Dang, good black farmland in Illinois is only $3,000-4,000. It's all about location, I see.

Plug your address in here and see what it says:

www.homegain.com

Jim S. · #32 03/13/07, 02:22 PM

Quote:

Originally Posted by quietstar

The Market Place don't care how much we paid or how much we need....Glen

You got that right, bro! LOL.

lmnde · #33 03/13/07, 09:54 PM

If you have an existing mortgage for home and land - suggest to your buyer to take it to your bank or mortgage company if theirs does not come through. If your bank financed you before - chances are they will finance your potential buyer if they have an ok credit rating, and they may be more inclined to do so as they are carrying your mortgage and do not want you to default.

On the other hand - if you are asking for more than what the local market bares - and if your buyer is agreeable - then see what their bank will finance and accept a second mortgage on the difference...

Lmnde

homemom1fl · #34 03/13/07, 10:22 PM

Has the buyer checked out getting a loan with Farm Credit Services? They seem to know how to handle these types of situations and the appraisers that they use probably do also. Just a thought.

Sparticle · #35 03/14/07, 07:26 AM

Quote:

Originally Posted by citilivin

As I said previously, I would look outside the traditional lender. I would check with a loan broker that specializes in rural properties and would have a better understanding of this situation. Traditional lenders have a difficult time looking "outside the box". I have never had an assignment that could not be appraised. The lender must be familiar with this type of assignment.

we've submitted the cost appraisal to the bank and the buyer is going to go through a mortgage broker as well.

i can't carry the note, the only reason i'm selling the place is to get out of debt the ex left for me and start from scratch with a new place.

Dutchie · #36 03/14/07, 07:35 AM

You are dealing with a two-fold issue:

1. The buyer's Loan Officer who apparently doesn't have the knowledge to find a lender whose guidelines accept properties and circumstances like these.

and

2. The buyer's Loan Officer's Appraiser. A competent appraiser should be able to do a comprehensive, reliable and credible report even in a tough situation like this.

The appraiser may have to go beyond 10 miles or 12 months or both. It can be done. We do them all the time.

Dutchie · #37 03/14/07, 07:41 AM

Quote:

Originally Posted by quietstar

Jamie...You have some fine folks and sincere professionals like Steve trying to understand your problem and offer good advice. I think its unfair to avoid revealing the important fact that your home is a manufactured doublewide in a market place that reflects an uncomfortable depreciation rate.

Ah. And how old is this doublewide?

Sparticle · #38 03/14/07, 08:26 AM

Quote:

Originally Posted by quietstar

Jamie...You have some fine folks and sincere professionals like Steve trying to understand your problem and offer good advice. I think its unfair to avoid revealing the important fact that your home is a manufactured doublewide in a market place that reflects an uncomfortable depreciation rate. It is showing up in the available comparable sales and it's unreasonable to think conventional home sales can be used. I'm glad you found a buyer willing to pay your price. Some clients in your position have chosen to take back a Vendors 2nd rather than lose a strong buyer. As always, The lending underwriter is the key to closing any loan. Good luck ...Glen

ugh. i wasn't hiding anything. i just wanted some general advice on what to do if your home doesn't have any comps. i didn't really give any specifics and didn't think it mattered. I've tried some things suggested here and even gone out on my own to get closing statements from neighbors. I didn't want anyone here to do anything but maybe help me think of other steps. I've even looked into a tree appraiser but that's not affordable. I appreciate all the advice I've gotten here and i'm sorry to see that it's happened to other people as well.

i'm at the point where i just want to sale and will probably just see if I can wait long enough for a buyer to come in with enough cash to make up the difference between the comp appraisal that the bank will give them a loan for and the cost analysis appraisal.

Sparticle · #39 03/14/07, 08:27 AM

Quote:

Originally Posted by lmnde

If you have an existing mortgage for home and land - suggest to your buyer to take it to your bank or mortgage company if theirs does not come through. If your bank financed you before - chances are they will finance your potential buyer if they have an ok credit rating, and they may be more inclined to do so as they are carrying your mortgage and do not want you to default.

On the other hand - if you are asking for more than what the local market bares - and if your buyer is agreeable - then see what their bank will finance and accept a second mortgage on the difference...

Lmnde

hey that's a good idea. thanks.

Sparticle · #40 03/14/07, 08:27 AM

Quote:

Originally Posted by homemom1fl

Has the buyer checked out getting a loan with Farm Credit Services? They seem to know how to handle these types of situations and the appraisers that they use probably do also. Just a thought.

i actually called them last week and never heard back from them. i need to call them again.