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Nick B

Trying to be a first time home buyer

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I have been working on buying a house near the Little Rock area since I am being transferred there. Yesterday the appraiser appraised the house 12K less than the asking price, since VA loans will only cover the appraised amount, we put in an addendum to change the offer at appraised amount. Well the home owners declined the offered, so I am out a months worth of time and about $1000. Back to square one. Honestly I think the home owner is crazy to think he will get asking price since it appraised so low especially in the current market.

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Yep, I AGREE that the home owner is CRAZY!! It is a BUYERS market right now in the real estate world. Anyone who THINKS he/she can get $10K+ more than a house is appraised at is just plain dumb OR in a situation where they don't HAVE to sell their house for anything less than they think it's worth (to them). Sorry to hear that you suffered a personal monetary loss on the deal!!! Hope you find a place that will fit your budget. There certainly are a LOT of homes on the market now all across the US which can't sell! My Boss at work is waiting to sell his house so he can retire but the market is SO BAD that he is having no luck with buyers at all!!

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Depends on where you live.  Up in my neck of the woods, home values are still appreciating.  Not at the double-digit figures of a few years ago, but they're still appreciating.  It's not a "buyer's market", nor a "sellers market".  It's more of a "balanced market" now.

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Nb, first of all I wish you the best of luck in finding your new home.

As Glenn said not everyone is in a buyers market. I'm only a couple homes short of the entire amount I sold last year. The homeowner is not necessarily crazy. VA and FHA loans require that the home appraise for full sales price regardless of down payment amount. A conventional loan only requires that it appraises for the loan amount. so if you were doing a conv. loan and putting 12,000 down you might of never known of the appraisal issue.

Plus, who said your appraiser is correct. 12,000 when your talking about a home is not very much. Chances are you could find many appraisers that would say the home is worth what the seller is asking. Also, I don't know the dollar amount of the home you are looking at but as amenity levels go up it is tougher and tougher to get an appraisal with a VA or FHA loan. In this area since the 100% conv. loans are no longer available the FHA max purchase price has been raised from 200,000 to 270,000. The problem with this is FHA was created to help first time home buyers. In this area 270,000 gets you a real nice place. So the FHA appraisals usually don't work out b/c you aren't getting full value for granite countertops, tile floors, custom cabinets etc.

Its obvious by your offer that you thought the home was worth it.  If you really like the home try approaching the buyer with the offer of getting another appraisal at his expense.  You might find out that the home is worth the asking price.  If the second appraiser says that the property is overpriced then maybe the seller will realize there is a problem and be more receptive to your revised offer.

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Thanks for the support.

The offer I made was 149500, appraised at 138000. According to my realtor's broker this is the third house in recent days that was listed above appraised value. I dont have a lot to put down, thats why Im going with VA. Its cool though Ive started looking again, but I am running out of time, I move in 30 days, with or without a house.

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The only known appraisal at the time of listing is the tax appraisal, and that is a very poor indicator of market value. I think what your broker was meaning is that this was the third occurence of an appraisal issue. Which is not suprising considering FHA and VA strengthing their appraisal requirements recently.  Otherwise, I would be having a conversation with my agent about why they are showing me homes priced over appraised value.

One piece of advice you may want to consider. Every VA loan has what is called a VA funding fee. I think this is 1.5% the first time you have a VA loan. Whatever the exact amount is it will be added to your sales price. The funding fee increases everytime you have a VA loan. I had someone the other day with a 12,000 funding fee. According to how many homes you intend on buying in your life time you might want to consider going FHA this first time. Otherwise you could find yourself with a pretty large funding fee on the next home since it will almost undoubtly be a more expensive home at a higher percent.

FHA only requires 3% down and that can be got around by increasing your offer by 3% and asking that the seller pay 3% of closing costs. Essentially a wash and a 100% loan.

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