• Go to page :
  • 1 23
  • Text Only
Voting History
rated:
I'm in the process of buying a newly constructed townhouse in Virginia. Since this is a new construction, we had to use the builders contract and there was no appraisal contingency. I'm using the builder's lender because they offered an incentive of 10K. The home is set to close at the end of December. Unfortunately, I did not do my homework upfront and went with the price that my realtor suggested. Now, when I look at comparable homes in the same community there is a difference of about 20-25K.

The appraisal report ordered by the builders lender came in today, and needless to say it was inflated to match the selling price. The reason I'm confident that the appraisal is fudged is because the sale prices listed in the comparables are different than what I see in the county assessment records for 3 of the 6 comps used. Is there anything I can do at this point? Please suggest!!

Member Summary
Most Recent Posts
subscribing.

raspino (Dec. 21, 2012 @ 10:53p) |

Did the OP ever even come back to this thread?

dishdude (Dec. 28, 2012 @ 9:10p) |

99% of appraisal questions are simple cases of buyer's remorse.

Fact is, if the house is for you to live in, who cares wh... (more)

Kanosh (Dec. 28, 2012 @ 9:31p) |

Home appraisal fudged; general opinion - OP is probably fudged.
  • Also categorized in:
Thanks for visiting FatWallet.com. Join for free to remove this ad.

Congratulations! You are consciously being ripped off!

What does your attorney say? Let me guess no attorney to review this six figure deal ?

new construction and no attorney is usually not good unless you really know what you are doing... and holy crap you are on at weird times. isn't it like 4 am in sf?

also appraisers are notorious for appraising things to mirror the sales priceSUCKISSTAPLES said:   What does your attorney say? Let me guess no attorney to review this six figure deal ?

kloakndaggers said:    and holy crap you are on at weird times. isn't it like 4 am in sf?



I don't think Crazy Horse closes until 3 or 4 am.

BADADVICE said:   kloakndaggers said:    and holy crap you are on at weird times. isn't it like 4 am in sf?



I don't think Crazy Horse closes until 3 or 4 am.
You mean "the office"?

Lesson learned: unless you enjoy getting ripped off, never ever buy a property without appraisal and mortgage contingency.

ecstacy said:    the appraisal is fudged is because the sale prices listed in the comparables are different than what I see in the county assessment records for 3 of the 6 comps used. Is there anything I can do at this point? Please suggest!!

Where I am at county assessment does not equal sales prices.

1) What have you agreed to pay for the house?

2) How much money do you have down?

3) Do you want to buy the house for less than you agreed or are you just looking for a way to walk away?

What are you trying to do with the inflated appraisal report? If the appraisal report wasn't near the selling price, you'd be bringing more money to the table to close with x% down.

I don't see how the appraisal is the issue here. You signed a contract to buy the house at a certain price. Getting them to change the appraisal doesn't change the price you already agreed to pay in the contract because there is no appraisal contingency. Next time I'll bet that you will be a little more careful before signing a contract.

woowoo2 said:   ecstacy said:    the appraisal is fudged is because the sale prices listed in the comparables are different than what I see in the county assessment records for 3 of the 6 comps used. Is there anything I can do at this point? Please suggest!!Where I am at county assessment does not equal sales prices.May not mean the county assessed value, I think he may mean that the county site is showing the actual sale price, which doesn't match what the builder's report is showing as a sale price.

But I agree with others, what other sold for has nothing to do with what you said you would pay. If you didn't carry out your own research (by checking county records ahead of time), how is that anyone else's fault?

don't pay. they can get you for breach of contract, its not a criminal thing so don't worry about that. it is merely efficient breach of contract and is actually favored in our jurisprudence if both parties play fair. the seller will have an obligation to mitigate its damages, which means sell to another party asap at the highest price possible. if you can show they sold other houses before the one you were supposed to buy or that they dillidallied, then you might be able to get out of the deal altogether.
In the end, you will owe the difference between what they sell it for (less than what you owed) and what you owed. So in this scenario, you pay money and don't get the house, but you pay less than you otherwise would. It is an option, if you choose to go the litigation route.

But you really need to get an attorney rather than coming on messageboards focused on sales and coupons asking for guidance on what might be the most important financial decision you ever make in your life. Would you go on webMD message boards to seek self-help guidance from the users there what you should do about the lump that just formed on your back?

rufflesinc said:   Lesson learned: unless you enjoy getting ripped off, never ever buy a property without appraisal and mortgage contingency.This has nothing whatsoever to do with getting ripped off.

Conceptually, an appraisal contingency is there to protect the purchaser from overpaying, except that as a practical matter it just doesn't work like that and never has. Ever since residential lenders were forced to start using appraisal management companies, the appraisers that are used as often assigned on a completely random basis, may or may not know the area, etc... Even before this requirement was introduced, the residential appraisal business has always been a bit of a shot in the dark, as there's tremendous subjectivity involved in it and, therefore, it has always been common that two appraisals that were obtained just days apart could end up showing valuations that are miles apart.

Conceptually, an mortgage contingency is there to protect the purchaser if he/she is unable to qualify for a mortgage. This has nothing to do with the property FMV and never has.

Now, there are uses for appraisal and mortgage contingencies, which have nothing to do with the above concepts. Namely, they can be used as an additional step in negotiations. Likewise, there are also plenty of situations in which dropping all these contingencies is also quite appropriate. Either way, having or not having these contingencies in the contract doesn't have anything to do with "getting ripped off."

ecstacy said:   I'm in the process of buying a newly constructed townhouse in Virginia. ..... Now, when I look at comparable homes in the same community there is a difference of about 20-25K.

If that's northern Virginia, then suck it up. It's less than 5% of the price

ecstacy said:   Unfortunately, I did not do my homework upfront and went with the price that my realtor suggested.

Sounds like a lesson learned to me. Your realtor made the best commission s/he could, in the quickest way possible.

Hope appraisers forced to fudge the numbers - http://www.seattlepi.com/local/article/Home-appraisers-pressured...

Get an attorney!

SUCKISSTAPLES said:   What does your attorney say? Let me guess no attorney to review this six figure deal ?

I am a first time home buyer. No attorney.

I trusted my realtor and realized very late that I got ripped off.

rufflesinc said:   Lesson learned: unless you enjoy getting ripped off, never ever buy a property without appraisal and mortgage contingency.

I have requested my realtor several times to add an appraisal contingency in the contract, but he was saying that we cannot add anything to the builders contract, and that this is typical in new constructions. However, in this case, even if there was an appraisal contingency, how would it help? The appraisal they ordered (albeit fudged) did come in at the selling price.

biglittle said:   1) What have you agreed to pay for the house?

2) How much money do you have down?

3) Do you want to buy the house for less than you agreed or are you just looking for a way to walk away?


I have ordered an independent appraisal. If there is a difference of 20-25K between this one and the old appraisal, I wanted to negotiate with the builder. I have 7K deposit and am willing to walk away and lose that money, rather than buy a house which is 25K under, if the builder is not willing to bring the price down.

geo123 said:   rufflesinc said:   Lesson learned: unless you enjoy getting ripped off, never ever buy a property without appraisal and mortgage contingency.This has nothing whatsoever to do with getting ripped off.

Conceptually, the appraisal contingency is there to protect the purchaser from overpaying, except that as a practical matter it just doesn't work like that and never has. Ever since residential lenders were forced to start using appraisal management companies, the appraisers that are used as often assigned on a completely random basis, may or may not know the area, etc... Even before this requirement was introduced, the residential appraisal business has always been a bit of a shot in the dark, as there's tremendous subjectivity involved in it and, therefore, it has always been common that two appraisals that were obtained just days apart could end up showing valuations that are miles apart.

Conceptually, the mortgage contingency is theere to protect the purchaser if he/she is unable to qualify for a mortgage. This has nothing to do with the property FMV and never has.

Now, there are uses for the appraisal and mortgage contingencies (as well as the inspection contingency), which have nothing to do with the above concepts. Namely, they can be used as an additional step in negotiations. Likewise, there are also plenty of situations in which dropping all these contingencies is also quite appropriate. Either way, having or not having these contingencies in the contract doesn't have anything to do with "getting ripped off."
Not quote following. I'm assuming the OP means if he got a legit appraisal, it would be lower than the selling price. Thus, if he had the two contingencies, the bank would balk at the loan and he could walk away.

ecstacy said:   rufflesinc said:   Lesson learned: unless you enjoy getting ripped off, never ever buy a property without appraisal and mortgage contingency.

I have requested my realtor several times to add an appraisal contingency in the contract, but he was saying that we cannot add anything to the builders contract, and that this is typical in new constructions. However, in this case, even if there was an appraisal contingency, how would it help? The appraisal they ordered (albeit fudged) did come in at the selling price.
Don't know anything about new building, but for normal transactions, the bank doing your mortgage orders an appraisal from a third (er, fourth) party. See my comment above. BTW, when I ask my realtor if I can add something to the boilerplate offer or contract, his response is "you can ask him for anything!"

jaimelobo said:   woowoo2 said:   ecstacy said:    the appraisal is fudged is because the sale prices listed in the comparables are different than what I see in the county assessment records for 3 of the 6 comps used. Is there anything I can do at this point? Please suggest!!Where I am at county assessment does not equal sales prices.May not mean the county assessed value, I think he may mean that the county site is showing the actual sale price, which doesn't match what the builder's report is showing as a sale price.

But I agree with others, what other sold for has nothing to do with what you said you would pay. If you didn't carry out your own research (by checking county records ahead of time), how is that anyone else's fault?


That is correct. The last sold price in the county assessment records is about 20K lower than what the appraiser put in the appraisal report.

Again, I totally agree that it is MY fault. I should have done this research a lot earlier.

rufflesinc said:   Not quote following. I'm assuming the OP means if he got a legit appraisal, it would be lower than the selling price. Thus, if he had the two contingencies, the bank would balk at the loan and he could walk away.

In this case, since I'm using the builders lender, I thing they are playing this together. It is no loss to the builder or their lender, because they will sell off the loan to wall st.

ecstacy said:   biglittle said:   1) What have you agreed to pay for the house?

2) How much money do you have down?

3) Do you want to buy the house for less than you agreed or are you just looking for a way to walk away?


I have ordered an independent appraisal. If there is a difference of 20-25K between this one and the old appraisal, I wanted to negotiate with the builder. I have 7K deposit and am willing to walk away and lose that money, rather than buy a house which is 25K under, if the builder is not willing to bring the price down.


It's a little too late to negotiate if you have a signed contract. The time to negotiate was before agreeing to price. If you walk away from the deal, you might be on hook for more than just the 7k deposit depending on the language of the contract.

I have tried to answer all the questions until this point. I will definitely contact an attorney as well.

The builder, their in-home lender, and the appraiser are all playing together - The appraisal was clearly fudged. Isn't this fraud?

ecstacy said:   biglittle said:   1) What have you agreed to pay for the house?

2) How much money do you have down?

3) Do you want to buy the house for less than you agreed or are you just looking for a way to walk away?


I have ordered an independent appraisal. If there is a difference of 20-25K between this one and the old appraisal, I wanted to negotiate with the builder. I have 7K deposit and am willing to walk away and lose that money, rather than buy a house which is 25K under, if the builder is not willing to bring the price down.


$20-25K on a $500K home is different than $20-25K on a $100K home.

20-25K is not unusual as a premium for buying "NEW". Even if the comp for other newish property is lower, the new one you're buying is priced right if someone (you or someone else) wants to buy it.

If you think you can find a way to walk and later come back to buy the same price for 20K lower, then do it.

ecstacy said:   SUCKISSTAPLES said:   What does your attorney say? Let me guess no attorney to review this six figure deal ?

I am a first time home buyer. No attorney.

I trusted my realtor and realized very late that I got ripped off.


#1 Mistake!! You trusted someone who's job is to make money from you as fast as possible and then to have nothing to do with you afterwards.

rufflesinc said:   Not quote following. I'm assuming the OP means if he got a legit appraisal, it would be lower than the selling price. Thus, if he had the two contingencies, the bank would balk at the loan and he could walk away.Please re-read my explanation. Having these two contingencies do not protect you from overpaying.

When was the original contract signed. If it has been several months, 20-25k could be explained by fluctuations in local real estate. As already mentioned, this could be 2-3% or 10-15% depending on the contract price.

The contract was signed on Nov 15th, for 390K. New homes (not resales) of the same model(by the same builder) were sold between 350K - 368K as late as November 10th.

ecstacy said:   The contract was signed on Nov 15th, for 390K. New homes (not resales) of the same model(by the same builder) were sold between 350K - 368K as late as November 10th.
The fact they suckered you to pay far more doesn't mean they did something Wrong.

But the things you said which concerned me is that the appraisal lists these same comps but at a higher price than the county records show?? that could certainly be fraud . Or there may be a valid explanation , though it seems unlikely

Before you move a step forward or sign another piece of paper in this $390000 deal you need to consult with an attorney . Not only may you save losing your $7000 deposit , you may be able to get the home for less (if you still want it ) , just by negotiation once the attorney shares this info of potential wrongdoing with the interested parties .

geo123 said:   rufflesinc said:   Not quote following. I'm assuming the OP means if he got a legit appraisal, it would be lower than the selling price. Thus, if he had the two contingencies, the bank would balk at the loan and he could walk away.Please re-read my explanation. Having these two contingencies do not protect you from overpaying.I read it. How does my scenario not protect the OP from overpaying?

Sold houses may be same models - but how many options did you add? Did you "have" to have the $10K wood floor upgrade, $5k jacuzzi tub, etc? That can add up quickly.

Does OP have chance to change Lender? - If another Lender comes in....and does appraisal by 5th party not related to anybody.....and Mortgage doesnt go through.....can the OP get out of this?

Could you have an "Event" that would no longer qualify you for the loan?

ecstacy said:   rufflesinc said:   Lesson learned: unless you enjoy getting ripped off, never ever buy a property without appraisal and mortgage contingency.

I have requested my realtor several times to add an appraisal contingency in the contract, but he was saying that we cannot add anything to the builders contract, and that this is typical in new constructions. However, in this case, even if there was an appraisal contingency, how would it help? The appraisal they ordered (albeit fudged) did come in at the selling price.


That is not the case, we added lots of lines to our new construction contract. Just curious, did your realtor also work for the builder?

nic3456 said:   Sold houses may be same models - but how many options did you add? Did you "have" to have the $10K wood floor upgrade, $5k jacuzzi tub, etc? That can add up quickly.

^^^This...

Skipping 53 Messages...
99% of appraisal questions are simple cases of buyer's remorse.

Fact is, if the house is for you to live in, who cares what the appraisal is? Doesn't change anything about the house. Conditions could be completely different if and when you sell.

Now if OP in the back of his mind thought he was getting some bargain he could flip for big money, then he's just gotten a very expensive education on how real estate works.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014