Do we have to show our appraisal to the seller or seller’s agent?

Question of the week: Do we have to show our appraisal to the seller or their agent?

Answer:  No.

One of our periodic questions of the week is what if the appraised value is less than the purchase price. That certainly is a very large concern and can cause issues, depending on how the buyer and seller decide to work to solve the problem.

However, what if the appraisal is higher than the purchase price? Can that be an issue? Potentially.

You are in escrow to purchase a home for $875,000. After your inspection (click here for difference between an inspection and an appraisal), you present the seller with a list of items that need to be repaired or replaced, estimated costs for the repairs is about $10,000.

It is fairly common that instead of making repairs sellers offer a credit towards the buyers’ closing costs so the buyer has the funds to make the repairs themselves after they purchase the property.

Before the seller makes the counter-offer to your request that repairs be made to the property, the appraisal report is delivered with a value of $910,000.

Before replying to your request for repairs, the seller, and the sellers’ agent (the listing agent), want to see the appraisal report. If the seller learns the appraisal come in with a value $35,000 above the sales price they may be less willing to make the repairs, or provide a credit.

To our question, do you need to show the appraisal to the seller, or the listing agent?

Because you paid for the appraisal, you own the appraisal and do not need to release the report to anyone other than the lender. From our standpoint, as the lender, we cannot release to report to anyone, including your agent, without your consent.

As a matter of practice, when we receive an appraisal report, we immediately notify you of the value and any comments in the report that may cause concern (such as “noticeable water stains on living room ceiling”). For a purchase we will communicate to the agents that we have receive the report with one of two notifications. Either, the report is in with “value sufficient for our transaction,” or “value lower than sales price.”

If the listing agent contacts us to reveal the value, we inform her/him that we cannot give them the value, they must get permission from the buyer for us to do so. This is not always well received, however our client, and duty, is to you and not the seller or the agents.

Not all lenders follow similar protocols, it is important if you are working with another lender, and your appraised value is higher than your sales price that you tell the lender not to release the value or the report to the seller or listing agent. The statement, “value sufficient for our transaction” is sufficient.

There is always concern an appraisal may have a value lower than sales price, but sometimes a value that is higher can also create an issue for you if not handled properly.

Have a question? Ask me!

More paychecks are being issued, 943,000 more in July than June as new hiring soared nationally. With over 700,000 of the new jobs created in the private sector, mostly in the hospitality, leisure and entertainment sectors, the summer has seen Americans making up for last year’s lost summer by travelling, dining out and going to concerts. The only sector that shrank in July was retail, losing 5500 jobs. The total number of new hires is somewhat skewed by the addition of 240,000 government jobs, mostly in the seasonal education sector, which has seen up and down employment through the pandemic. Reflecting more hires, and fewer people actively looking for work, the unemployment rate dropped from 5.9% to 5.4%. Year over year wages are rising at about 4%, keeping up with inflation. Overall, the news is not positive for interest rates.

Rates for Friday August 6, 2021: Prices for Mortgage Backed Securities (MBS) peaked early in the week (higher prices = lower rates) and have been falling since, putting upward pressure on rates. The lower MBS prices have not transferred to rate sheets, yet, but it would not be a surprise if next Friday rates are higher after five weeks of stable rates and prices.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30 year conforming                                         2.625%  Flat

30 year high-balance conforming                   2.75%  Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

I like that the number of sports with competitions in the Olympics has expanded from the number competing when I was a kid. It enables more athletes to compete in the premier international sports event and spend time in the Olympic Village meeting athletes, coaches, judges from other nations.

Every day there is a great story of an inspiring competitor, whose story and performance we would never know about except for the Olympics. Seeing a competition where someone misses the medal podium by an instant, yet had their personal best time in the event—sad for not medaling but proud of doing their absolute best at the exact moment it needed to be done. Competitors helping each other, such as when two runners fall, lift each other up and run to the finish line together to complete their Olympic experience.

For as long as I can remember I have loved sports, participating (not that well) and watching. The unscripted outcomes and chances of seeing some incredible displays of athleticism are what draw me to sports the most. The Olympics, with so many sports and athletes who are at the pinnacles of their sports is a wonderful buffet for hard-core and casual sports fans.

I hope you have enjoyed the games!

Have a great week,

Dennis

Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog