Monday, May 17, 2010

Monday Bunday: Comparable















As you can see, these two share many similarities but aren't really comparable.

Just so, it looks like my home purchase may come to nothing for a silly reason. University Oaks is a very small neighborhood and has few houses the size we're trying to buy. We've consulted two lenders and two appraisers now, and neither can secure underwriting for the loan amount I need because there have been no sales of truly comparable homes.

Oh, there have been sales similar in square footage within an appropriate radius, but they're in the slummy neighborhood nearby, where one is likely to get shot while watering the garden. Here, where there has never been a crime more serious than someone getting their lawnmower stolen because they forgot to close the garage door? No home sales. People move here and stay for decades. They pass their houses on to their children.

Since we can't get an appropriate appraisal, we can't underwriting. Sad, because they were happy to lend me the amount I needed at 5% interest until the appraisal came back so low. The seller has offered to finance, but he wants me to pay off the note in five years and I've been unable so far to get him to include a proviso in our contract that will protect me if I still can't get an appropriate appraisal due to lack of comparable sales.

So things are at an impasse right now. It's frustrating to think we may have to move again over such a dumb reason as underwriting regulations, but life is full of dumb rules. One simply tries to maintain serenity in the face of all the insanity.

Have a safe and sane week, everyone!

15 comments:

Leah J. Utas said...

That's quite flummoxing reason. I do hope things turn around and you get past this absurdity.

Lisa said...

Bunnygirl, that's sort of absurd. If they can't appraise the house until someone has a sale, but they can't sell until they get appraisal, does that mean no one in your house can ever buy or sell their home, ever? Seems impossible with that kind of circular issue.

There HAS to be a way around this. I know you'll find it.

bunnygirl said...

@Lisa: The problem is house size. Most of the houses in the neighborhood have been added onto over the years, so there are few remaining that have a comparable square footage.

The seller can get his price only if he can find a buyer with sufficient cash to make up the difference between the appraisal value and the sale price. Right now, that would be about $50K, which I don't have.

Since he seems quite certain that he can find someone who can give him what he wants, he isn't willing to work much with us on this matter. If we can't come to an agreement, it might be entertaining to sit back and watch him lose other opportunities to sell. Then again, maybe someone really will come along with $50K cash to put down. But if I had that much cash, I'd be buying one of the bigger houses. I have a feeling other buyers will feel the same way.

Glenna said...

Oh, that's both sad and dumb on their parts, since I know how much you wanted to stay. The current market and lending rules are stupid, stupid, stupid. The larger problem is now the process, which keeps so many good and worthy borrowers out of the system, is choking growth and recovery and depressing housing values because so few perfectly qualified people can buy. Grrrr. Best wishes on it.

Susan Helene Gottfried said...

Allow me to slam my head on my desk in tandem with you... how utterly stupid.

Christina said...

Cadbury seems unsure of what to make of the stuffed bun.
There are an incredible amount of stupid rules out there that seem to serve no purpose whatsoever. I am sorry this is such a mess for you.

Thomma Lyn said...

ACK, Ann. How frustrating and ridiculous! You're so right about dumb rules. I hope things ultimately work out.

divakitty said...

Poop

divakitty said...

Poop

The Bunns said...

Yea - Poop, Poop!

RG says it must be due to the previous bad lending practices has made everybody crack down. He also suggests that maybe you do not want to buy it at over the appraisal because you might get stuck with it down the line - unable to sell because no one else will buy at over the appraisal.

Rabbits' Guy said...

Now hang on a minute here, bunns. It just ocurred to me - perhaps you can get an independent appraiser to look at it .. use the approach of what it would cost to build it new and then depreciate that based on how old everything is (or isn't) ... this might work especially if you can seperate the land value from the dwelling value.

bunnygirl said...

@RG: I've had it appraised twice now, once by someone who regularly does deals in this area. The problem is that underwriters now require recent (within 6 months) sales of comparable properties in order to set the appraisal price. There's nothing about the house itself that raises any red flags.

The only sales in the last year, let alone six months, of houses of similar square footage, number of bedrooms and baths, etc, were in the bad neighborhood where prices are much lower. Therefore, we can't get underwriting. Even the loan broker agrees it's ridiculous, but it's not a regulation we have control over.

There's a good likelihood that values will go up throughout this area over time, so I'm not unwilling to pay the seller's higher price, but if he's going to require that I pay in full within five years, I need something in the contract to protect me if values don't increase as quickly as we think they will.

As of today, he's not willing to give me that clause. *shrug* It'll be entertaining to see him try to find someone else who can pay his price anytime soon. I might invest in a good popcorn popper so I can have snacks while I watch.

d. moll, l.ac. said...

Lot's of poops....This is just the sort of thing that makes me want to be an anarchist, don't they know you have a rabbit?

RoadBunner said...

Having never gone through a buying a home, I have nothing intelligent to add to the conversation. But I will say I am sad to hear such a silly thing is holding everything up :( I hope something good happens for you guys soon! And I agree with D. moll -- lots of bunny doots to them!

the Bag Lady said...

Well, crap.
Perhaps something will happen that will change the seller's mind about either the clause you would like him to include or his asking price, and this will turn into just a minor setback.
Best of luck to you.
(pass the popcorn)