I blogged just a few days ago about how a client went with an online lender, and that lender sent an appraiser to the client’s home who was not local to the marketplace, and the appraised value ended up coming in low enough that the client had to pay $45,000 out of pocket to pay the loan down. I am not sure how spending $45,000 in cash results in a good deal to the client, but, maybe I am missing something.
Now, it has happened again, in only a week. I lost a client to a bank based in North Dakota. The bank had a rate 1/8% lower than mine. And I had even explained that a distant bank would have no relationship with local appraisers, and he was almost guaranteed to get a lowball appraisal. Here is what the client got for that 1/8%:
“The appraiser came out to my house this week. To my disappointment, he valued the house at $503K. As I said, my expectation was $553K based on a lot of research and recent sales. He mentioned that there were not too many comparable sales recently, but I disagree. It sounds like he does not know the local marketplace. So, in order to be within the 80% LTV range, looks like I need to pay a lot of the old loan amount off, out of my own pocket.”
Did he get a better deal than I offered? The 1/8% equals about $29/month on his loan amount, to get that he’ll likely have to pay tens of thousands of dollars of his loan off, because of what is likely an inaccurate appraisal.
I can only say it so many times everyone, then I am going to have to move on to some other blog topics, ASK ABOUT THE APPRAISER! Maybe no one reads my blogs…so no one is learning all this? Hello? Is anyone out there? Is anyone reading this? Is no one getting benefit of my 25 years in the mortgage business? PLEASE, I AM BEGGING YOU, ASK ABOUT THE APPRAISER!
Large banks, distant banks, and online lenders are very likely to be completely out of control on how they source the appraiser and the quality of the appraisal work. Search my other blogs for “appraisal” and “HVCC” if you want to know the nuts and bolts of why that is, otherwise, ASK ABOUT THE APPRAISER. If a lender cannot guarantee a local, experienced appraiser; run away; I don’t care how low the alleged lower interest rate is.