Wednesday, August 14, 2013
The House Saga, cont.
I had three full price offers on the house the first week, all FHA. FHA lenders will only give mortgages if the appraisal is for the full price. This didn't happen. My house appraised for $25,000 less then what I owe! The problem is two-fold. The location and the market.
I am located in a city that is full of foreclosures, bank owned houses and rentals. There was nothing for sale in my price range for comparison. My neighborhood is nice but the surrounding blocks are starting to get run down (one of the reasons I am moving). If I plucked my house up and moved it to another city in my area I could get $15k-25k more for it.
The other issue is the market here in the Detroit area. According to the Detroit Free Press,
"After a spell of dreary years, the metro Detroit housing market is finally regaining much of the value it lost in the crash. But many real estate agents and home sellers say the market’s comeback could be even stronger if it wasn't for what they consider overly conservative appraisals that lag the prices buyers are now willing to pay. No one is tracking how many deals are falling through because of low appraisals. But for some brokers, close to a quarter of their deals this summer have run into problems because the appraisal came in below the price that the seller and would-be buyer agreed upon, according to multiple agents interviewed by the Free Press.In a more typical “good” market, that figure is around 5% to 10%, they report.“The appraisals are really just killing things right now,” said Jason Matt, a Realtor with Coldwell Banker Weir Manuel in Plymouth, who estimates that 30% of the 113 homes his team has sold in 2013 have encountered appraisal problems.Because lending institutions generally don’t write mortgages above the appraised amount, an appraisal below the agreed-to selling price will scuttle a deal, unless the buyer can bring enough cash to cover the difference between the sale price and the appraisal."
So, there you have it. I am stuck in the middle. My house is back on the market for conventional or cash only. I am giving it until around Labor Day. If I don't get a reasonable offer by then I will turn it into a rental for a few years. This isn't my favorite solution but it may be my only option!