My clients Ronita & Rohit chose a beautiful house and we had already offered. The seller had bought the property at 1.135 million in the month of may and then they flipped, by the month of July they got the property listed at 1,198 million. There expectation was another 100k.
We had written our offer at 1.290 million with an appraisal contingency of minimum appraisal value to be at 1.225. In that case the buyers had to be prepared for the rest of the 65K . The appraisal was conducted and everything went good. The appraisal report said that the property got appraised at 1.228 million, which was a good news since our base appraisal contingency was 1.225 million.. The next day I was all set to remove my appraisal contingency when my loan agent called and asked if I have checked the report thoroughly. I knew I had done that as for all my other appraisal reports and checked all important points. However, he apprised that the appraiser had ticked in a box, which mentioned “declining market”. Well, this came as a surprise, since during my stint in the industry, I never came across any appraiser to have checked on this box.
Furtherance to the opinion of the appraiser I enquired with the lender about it’s impact on the loan process. The loan agent apprised earlier as decided these buyers would do a 10% down payment along with the difference amount of 60k .Now, because of this opinion of the appraiser the loan agent can’t accept a 15% down payment and it needs to go up to 20% down payment from the buyer side plus the difference amount plus they also needs to show a fund reserve of 80k in liquid. Now, the buyer was running short of funds to meet up all these criteria. Moreover, Rohit’s funds in stocks will get only 40% value. Thus, that created further difficulty.
Meanwhile I took an extension from the seller. Got my buyer introduced to other lenders. Also, I raised a point to the existing lender that if the appraiser appraised a property himself at a higher rate at 1.228 in August which was only bought at 1.135 in May, then how did he mark it as a declining market. He is self-contradicting his own statement. I approached the lender to review the file and asked them to get that 5% extra down payment to be waived off and let my client go ahead with the 10% down payment.
The existing lender’s ROI was at 4.125%, but he had to give the 62k difference amount plus 15% down payment plus had to keep a liquid reserve of 80k.
However, I convinced my buyers to get the home appraised by another lender known to me. After a lot of ifs & buts my buyers agreed and the second appraisal was initiated. The second lender had sent their appraisers and got the property appraised. The appraisal was done the same day and was appraised for 1.290 million , our offered buying price. With this Second lender here was no fixed down payment , since the entire offered price was funded they could go ahead with 10% or 15% down payment plus you need not pay any extra differential amount nor you have to show any reserve, but yes, the rates were higher at 5.6%.
The Rate of interest kind of deterred my client to go ahead with the new lender. And Rohit was more inclined to take it up with the previous lender since the interest rate was comparatively lower.
In spite that the buyer asked me to cancel the next lender’s loan documents, I kept it on hold and was following up with the buyer if his loan has got the approval from the previous lender since he had only another 15 days in hand.
On the other hand, Rohit was due for an employment change recently and that might just coincide with the disbursal time. In that regard asked him to speak to the previous lender about his upcoming job change. Following that, he went to the lender and spoke to him about his forthcoming job change. Listening to that, the lender showed apprehensions over the processing of loan within the stipulated time. The concern was the second employment verification which was due before disbursal of the loan will be done around the time by when Rohit would have to be already in notice period and with that verification feedback the chances of the loan disbursal become negligent.
At last, based on this opinion from the lender they realised that the time they had in hand to get the disbursal done might not work in their favour. Thus, after a lot of thought both of them agreed to go ahead with the second lender whose interest rates was a little higher but surely, he didn’t have to empty his pockets to avail the loan.
The disbursal verification was completed by 28th, and on 29th he had put down his papers and the loan got disbursed on the 30th.
Today they are the owners of the beautiful home.
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