Urgent Help needed re: appraisal and downpayment, r.e.agent giving me runaround...

**velcroban** · 08-17-2010, 06:03 PM

Hi everyone. First time poster, entirely new to home buying. Ive been renting all of m life and I decided to finally take the plunge. To preface, I have a perfect credit score, steady job etc. I don't know how relevant this all is. Again, entirely uninformed.

I've been working with a real estate agent looking for co-ops and condos in Brooklyn, NY. I settled on a co-op. The seller's agent gave me a price of 260k. I was pleased with this arrangement and assumed a downpayment of 20% which had the been the standard every precedent seller had set forth. Two days later, the seller's agent calls and says the dp is actually 40%. Now, I can't afford 40%. It would stretch my limit too much. HSBC, my bank, has qualified me for a 500k mortgage, but that's besides the point I guess. I asked why, and my agent tells me its because of the flip tax, which is 20,700. Now, I was under the impression that a flip tax was generally between 3-5%. I was also under the impression that either the seller paid the flip tax (which seemed intuitive to me) or the seller tacked it on to the total price, which would be disclosed to me.

So my agent is telling me that HIS bank is insisting on 40% because they don't want to take the risk of getting 20% downpayment and subsequently foreclosing, and not having the money to pay the flip tax. Having no knowledge of real estate, this seemed to follow at least consistent logic. I say I can't and to try to get it down to at least 35 if not 30.

The next day my agent says that her boss is now involved, and that he is speaking to people. I ask, the bank? I get double talk essentially. Today, she says they have lowered it down to 35. I get a call 7 hrs later and she says the price is back up to 40%. I ask whats going on, and she says its not the bank that is demanding 40, but the owner, and the owner is afraid of not passing an appraisal.

Can someone please tell me whats going on? I think I understand the concepts of a flip tax, but I'm not sure what that has to do with an appraisal. And what purpose does the appraisal serve exactly? It gives the bank an estimation of what the property is worth for what? Reselling in the future? Why does the seller's concern of a bank appraisal raise my downpayment.

Very sorry for long post. Sorry for ignorance. I hope someone can offer some insight, because things are moving at a fast pace and my real estate agent won't answer direct questions. Thank you.

**wheels15** · 08-17-2010, 08:48 PM

im new at this also but from what i can understand you should get pre approved and submit a pre approval letter from your lender.

**velcroban** · 08-17-2010, 09:04 PM

my real estate agent put me in touch with a mortgage broker who completely ran my credit check and okay'd me for a mortgage. Now, I really don't want to actually get a mortgage from him because I am comfortable with the people I know at my bank and they too have pre-approved me for a mortgage, but the point is that my agent is aware of that situation and would tell me if thats the next step. Moreover, i confronted her today about the sketchy dealings regarding this coop and how I haven't had a direct hand in the negotiations, and she wouldn't give me the number of the other agent nor put me in touch with him, saying thats "not how its done" so I dont even have the opportunity to offer this qualification. More to the point, this appraisal and downpayment business seems to have something to do with the seller (I think), because I have no idea.

**Greg** · 08-18-2010, 04:36 AM

Get your loan from the lender you prefer and not the lender the agent is forcing on you.

If the seller is worried about the appraisal then the property is overpriced and you should continue looking for one that will appraise.

If the seller is demanding 40% down then you need to find another seller.

Have you talked to your lender about buying a co-op? It is possible that your lender may be hesitant to lend on a co-op also.

It sounds like you need to keep looking.

**clemy** · 08-20-2010, 07:08 AM

I have no knowledge of NY real estate or flip taxes or the process of buying a co-op. You obviously have the wrong realtor because she is not helping you understand what is going on. However, you are stuck with her for this purchase.

The appraisal is to tell the bank that the property you are purchasing is worth the purchase price, basically that the appraiser thinks someone else might pay the same price. One of the reasons you heard for the larger down payment is that someone doesn't think the appraisal will be as high as the purchase price. You have agreed to $260K. If the appraisal comes in at $240K, you have to pay the difference because the bank will only loan you $240K.

You need to talk to the loan officer at YOUR bank or wherever you want to get the loan and find out what their requirements are for this purchase. The seller does not dictate what your down payment is.

You also need to talk to someone about the what the process is for buying real estate in NY. I understand it is slightly different from other parts of the country where purchase contracts are used. Ideally, your realtor should have explained this to you, but it doesn't seem to have happened. Maybe sit down with her and talk this out until you do understand what is going on. That's why she is getting paid.