Lender says appraisal not needed

Discussion in 'Real Estate' started by mtowncyclone13, Sep 17, 2015.

  1. mtowncyclone13

    mtowncyclone13 Well-Known Member

    Oct 10, 2012
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    Our lender says an appraisal is not needed for a home mortgage we have applied for. Values in Marshalltown are all over the map so I'm not sure what that exactly means.

    Asking professionals - should we still get one or not? I think it will be about $400.
     
  2. cyflier

    cyflier Active Member

    Apr 13, 2006
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    Are you putting a significant chunk of change down? If so, the lender may not be requiring it because you already have equity.
     
  3. mtowncyclone13

    mtowncyclone13 Well-Known Member

    Oct 10, 2012
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    We are putting down 30%. My fear is we'll drop 200k on a house and then in a year it'll only be worth 150k or something. I called the lender and he said that, right or wrong, appraisers often make the house meet the sales price. So having an appraisal won't really tell us much.
     
  4. cyflier

    cyflier Active Member

    Apr 13, 2006
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    If you want to spend the money on an appraisal to make you feel better, go for it. The appraisal is not going to effect what the market value will be in a year. Like your lender said, the appraisal usually comes in right at the sales price. If you are comfortable with the market and the price compared to comparable properties, I would save the money and not get one.
     
  5. Incyte

    Incyte Well-Known Member

    Apr 12, 2007
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    Wouldn't the time to determine market value have been before you agreed to terms with the seller? Locking in a purchase agreement and then determining market value is a strange way to buy a house.
     
  6. Gossamer

    Gossamer Well-Known Member

    Apr 10, 2014
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    that's typically how it's done...appraisals are rarely ordered prior to a P/A being put together. Having said that, I think what you're saying is the OP should have done something to feel good about the price being paid prior to writing the P/A...which I agree with.
     
  7. Gossamer

    Gossamer Well-Known Member

    Apr 10, 2014
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    I find this suspect. In 20+ years of lending, I've run into no appraisal purchases maybe 5 times. A PIW (property inspection waiver) is typically done on refinances when the value is understood and the equity more established...however, 30% down is a significant amount and you're probably a very strong borrower. (good for you)

    That being said, unless you have a definitive reason to put that much down, I might reconsider stopping at 80% and keeping the 10% in your pocket. Any time someone moves into a new home, there is need/want to have something a little extra. You can always accelerate your amortization schedule by making extra payments to principal over the course of time.

    To answer your question, if you contact an appraiser directly and tell them you'll pay cash, it will cost you less than $400. Most appraisers are affiliated with AMC (appraisal management companies) who rake a large portion of their cost to be on their list of appraisers. You tell an appraiser $250 or $300 and you will get a solid appraisal.

    Finally, remember that your lender's money source has data up the wazoo about your property. If it's being sold on the secondary market (Fannie Mae, Freddie Mac), it's been run through a DO or DU which is an automated underwriting system that bounces both your information and the property information off their databases...with Fannie Mae's billions of data points they've been collecting over the past decades, they know the value of nearly every home in the US based on address, comps, etc.

    Anyway, if you need any additional help or have questions, PM me. Good luck. :) Congrats...buying a home is fun.
     
  8. CarlHungus

    CarlHungus Well-Known Member

    Feb 19, 2012
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    Is this a homepath property by any chance? That's really the only case where I can think an appraisal is not required on a purchase
     
  9. dsmfinanceguy

    dsmfinanceguy New Member

    May 30, 2015
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    I'm late to the party... But is your purchase agreement subject to an appraisal? If so, you have the option to get the appraisal as a protective measure. But, it's not a necessity to get the deal done.

    With larger down payments, higher credit scores and lower debt-to-income ratios; appraisals can be optional based on investor requirements.

    ... Again, I'm probably too late to help on this... But maybe it'll help someone in the future :)
     
  10. ArgentCy

    ArgentCy Well-Known Member

    Jan 13, 2010
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    Fannie Mae instituted a rule a couple of years ago where I believe houses under 250k don't Have to have an appraisal. The whole appraisal process is screwed up. The time to hire you own appraiser is before putting in the offer but often times you don't have time or other buyers will step in. It's still very rare for loans to not require an appraisal but I think it's getting more prevalent.

    The only time an appraiser will typically come in different than a PA is because there is natural variance in home values. IE. It's worth a range of prices. There are lots of sales that are on the high end (ie. not good value) but still within a reasonable range.
     

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