Desk Appraisal is killing deal - 1 day before signing - HELP!!!

**schnieds** · 08-27-2009, 06:20 AM

Hi,

We are the sellers in a very unfortunate situation right now and I am looking for some real estate and/or legal advice.

We purchased our home in Northern California in Dec 2008 for $400K. Since moving in, we have made the following improvements:
- New 40 year composite roof
- New external AC compressor & upgraded HVAC venting, etc.
- New sprinkler system, front & back
- New stainless steel appliances
- New safety pool fence
- Upgraded landscaping
- Various other interior & exterior upgrades/improvements

In July of this year I received a promotion into management at work and a request that I relocate to another company location so we put our house on the market. We listed it at $440K to cover the closing costs and figured that all of our improvements were worth the extra value as well as the fact that our home is in an area where the home values have remained relatively stable.

We received an full listing price offer 6 days after listing our home. The sale process started and the lender ordered an appraisal. The appraisal came back at $440K and everything was all set.

Since the appraisal was finished and we agreed to a list of repairs with the buyers, the transaction has proceeded. We made arrangements for the move such as packing all of our belongings, selling a lot of items that we didn't want to move, leasing a home in the area we are moving to and fixing the repair items agreed to.

We were scheduled to sign papers today (8/27/09). However, yesterday (8/26/09) our real estate agent received a call from the buyer's agent that the lender performed a desk appraisal on 8/25/09 that came out to $380K and the bank would not fund the buyers loan! After everyone raised a big stink the lender is sending out a field reviewer to check the work of the original appraisal.

Quick Summary:
- House sold for $440K on 7/31/09
- House appraised at $440K on 8/6/09
- Contingency removal on 8/12/09
- Desk appraisal on 8/25/09 of $380
- Field reviewer coming out soon

My questions:

1) I stand to lose $7500 right now if this deal falls through ($4K on new rental lease, $3K on repairs, $500 travel expenses). Do I have any recourse as the seller? I waited until the last minute (last Friday) to sign the rental lease and was assured at the time this was a done deal.

2) Is it legal for the bank to override the original appraisal one day before signing?

3) Am I entitled to the earnest money in this scenario? Which appraisal is the valid one?

Thank you for your help and comments, we are in a very bad position right now and I need any good advice that I can get.

**tucsonhomes** · 09-03-2009, 01:12 PM

The entire situation with lenders and appraisals is in a state of change. Lenders cannot (or at least are not supposed to) have direct communication with apprasers at all. Lenders are required to hire appraisers through intermediaries and the intermediary may hire an appraiser that has little or no knowledge or skill (or experience) in the community or type of property that needs to be appraised.

Make your federal legislators aware of your situation. They made the mandate and they need to change it.

**Greg** · 09-04-2009, 05:51 AM

The underwriters, the ones who actually lend the money, are going over appraisals with a fine tooth comb these days looking for anything out of the ordinary. It could have been anything that did not look right.

Possibly the fact that the house sold 8 months ago for less than the contract price combined with a declining market sent up red flags. They are looking for anything that might indicate loan fraud.

You labeled all of your improvements as new which translates to normal maintenance, which doesn't really add value.