Appraised Value Versus FMV
To all creative investors/lenders:
Mortgage lender question:
As I am talking to a whole sailor, she did the appraisal on a property and got a value of
$66k. She is wholesaling the property for $58k. The buyer is asking for $52k.
My bosses are telling me that the sales price is the appraised value. The price of the property can not be less than the appraised value.
As I am trying to get a loan based on LTV, I have a vested interested in maximixing that number. How do I do that legally?
I know that I can claim 3% seller contribution.
I am sure I am missing some info here also.
I also know that there are loans with a 100% LTV. My lender did not qualify in this case.
How can I get the bank to pickup more of the tab?
Thanks in advance.
(Also, I sometimes feel like kicking myself for my college days. Here I am get paid the more I learn, while in school, I paid a lot for a piece of paper. There is some kind of irony here!)
-Charlie <IMG SRC="images/forum/smilies/icon_smile.gif"> [ Edited by CharlieG123 on Date 03/14/2004 ]
Why can't the appraised value be less than the sale value? Investors looks for properties like that, so your bosses have things backwards...
That is my question.
Example: The sales price for the property that you are looking at is $1.00. Is $1.00 below appraised value? Of course!
Shop around for a lender who will give you a loan on your terms.
Good luck!
Quote:
On 2004-03-14 17:58, Birddog1 wrote:
Why can't the appraised value be less than the sale value? Investors looks for properties like that, so your bosses have things backwards...
Birddog,
The appraised value cannot be lower because the bank will only lend on the as/is appraised value. The loan would then be considered over 100% of the appraised value. He already stated the lender won't approve that scenario.
Think about this: Why would you pay $100K for a house that is only worth $90K
Unless the house will be worth more when it is rehabbed, in that case you work off an ARV appraisal. And that would be the type of loan you will need.
Lori
[addsig]
I do not believe that you can get a new loan from a conventional lender that is based on anything other than the sales price. Yes the appraisal must support the sales price. But they lend based on the sales price. I have had lenders talk about the LTV, and when I question them they say something like the LTV on a new loan is the sales price.
Has anyone ever gotten a loan from a conventional lender based on anything other than the sales price?
Brenda
Bosses, what bosses?
Brenda, yes it is possible to use appraised value rather than sales price. Such lenders are hard to find but it happens all the time in commercial, next to impossible in residential.
The other method here is to make it look like the sales price is closer to the appraised value but you have to be careful or you start to get close to bank fraud and bank fraud is federal prison time. Some sort of seller credit back to the buyer. Usually that is a renovation credit but your lender may expect it to be escrowed until the renovation is done.
Another option is to close on conventional guidelines (lesser of appraised or sale price) hold the property 6 months and refinance. Now the sales price is not an issue and the lender will, as a rule use appraised value without reference to your purchase.
Mark
Brenda,
Actually, I do have a couple of banks that do "rehab loans". They will lend based on the appraisal of the home after it is fixed up.
(These are local banks probably would not lend outside my local area.)
If the local banks are lending based on the after rehab value, then you are doing a refinance and not originating a new loan. At least that is the way it sounds since you must already own the property.
Brenda
Brenda,
They are called rehabb loans. You find a house, it needs fixed up, you find out how much the ARV will be. Then you determine what the repairs would be. Does the deal work out? If it does you get up to a 90% LTV of the ARV. That pays for purchase and repairs, 100% financing with equity left in property.
There are banks for owner occupied that allow unlimited seller credits. They are based on the Appraised Value not the Sales price.
Lori
Maybe these types of loans are not offered in your area but I doubt that. They are nationwide.
[addsig]