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We are under contract to buy a house and close on Dec 1st. The sellers have some things they were supposed to have fixed by Nov 24th, and provide proof to us that those things were completed. We have not got notice as of yet.
Our realtors were out of town for the holiday week and just got back today. The appraisal took place while our realtors were out of town. The house did appraise for 4000 less than the agreed upon price. It was in the contract that as long as the house came in more than 187000 the deal was good to go...it came in at 188000. We figured all was good. (The sellers are only breaking even).
So my realtor just called, (they just got home) and says the sellers are wanting to know if we would be willing to delay closing until Dec 6 as they are unsure that the underwritters will approve. What does that even mean? It sounds to me like another excuse to delay closing. Sellers have had to be pushed to sign back docs on time, almost always late. I understand they dont want to move out of the home and then find out that something made the sale fall through.
Anyway, I don't understand what could go wrong with any underwriting since the amount the house appraised for fell within the agreed upon amounts. Can anyone educate me? My realtor tried, but I only got that it sometimes happens that underwritters don't appove.
Basically, underwriting is a process that your lending institution uses to make sure that everything has been completed so that the loan can be completed. Even though you have completed all of the contractual obligations - your lender will still need to verify employment just days before closing. Your appraisal may go through another level of scrutiny.
Who is covering the difference between the agreed upon contracted sales price and the appraised price?
Whether the underwriting takes more or less time is probably a question best answered by the lender. In the State of Georgia, we have a unilateral extension or early closing of 7 days from the contracted closing date.
Who is covering the difference between the agreed upon contracted sales price and the appraised price?
We agreed on 192k or appraised amount down to 187k.
Quote:
Whether the underwriting takes more or less time is probably a question best answered by the lender. In the State of Georgia, we have a unilateral extension or early closing of 7 days from the contracted closing date.
We figured that we will find out Monday if the lender/title co needs more time we will deal with it then. I don't feel like we are wrong for not volunteering to delay closing.
I'm in AZ. The appraisal came in last week. Guess we will find out Monday on way or another. I know before we even had the appraisal our loan lady was curious if we were interested in closing early. Darn appraiser took a long time.
In today's market, you've agreed to pay $5k cash out of your pocket above the appraised value? You do know your additional required down payment will be based off the $187k number in addition to the extra $5k? That's what the lender is trying to work out. They are rerunning numbers to see if your going to strap yourself on reserves coming out of pocket an additional $5k, PLUS, they have to completely redo your loan based on the lower price as you've gone through underwriting at the higher price.
You're, more than likely, not going to close on Dec 1 at this point. I don't see it happening. Your GFE will have to change with the new loan amount and with the new rules, you have to have 3 days to review it before they allow the process to move forward. You cannot waive the 3 days.
In today's market, you've agreed to pay $5k cash out of your pocket above the appraised value? You do know your additional required down payment will be based off the $187k number in addition to the extra $5k? That's what the lender is trying to work out. They are rerunning numbers to see if your going to strap yourself on reserves coming out of pocket an additional $5k, PLUS, they have to completely redo your loan based on the lower price as you've gone through underwriting at the higher price.
You're, more than likely, not going to close on Dec 1 at this point. I don't see it happening. Your GFE will have to change with the new loan amount and with the new rules, you have to have 3 days to review it before they allow the process to move forward. You cannot waive the 3 days.
I had a client pay above appraised value for a house this year. The appraisal was way low and they knew it. Homes like the one they bought are a rare find. It was an estate that wasn't on the market yet and it would have had multiple offers if it was on the MLS.
My clients still got it below market even going over appraised price.
In today's market, you've agreed to pay $5k cash out of your pocket above the appraised value?
We will pay the lower appraised amount - not the original agreed amount. We are saving money, not paying over. Maybe I said it wrong before.
agreed price - 192k or appraised amount not less than 187k
appraisal was 188k, right in the margin...so we will pay 188k, not 192
We are saving money I realize it may take longer, but didn't want to willingly push out closing for a just in case. If we end up closing later that's ok. I was just thinking that the sellers were trying to delay things again...and was unclear what exactly underwritting was. Thanks for the info.
Also, my dh's co-worker just paid 10k over appraised amount (he split diff with seller) for his house. So people are doing it. I think it's crazy, but if our appraisal came in below our 'not lower than price' by just a few k, I think we would still buy it. Compared to all the other houses we have seen...in this price range.
Last edited by 123catlady; 11-27-2010 at 07:24 PM..
Reason: re-worded
Obviously, I don't know their personal situation, other than the fact that they agreed to sell at their low of 187k. So I am guessing that the 187k is their break even, and that a better appraisal would have given them a little cash. Sucks for them, they put a lot of money into new floors and a kitchen.
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