I have a home under contract. The Sale price is 15K under the Appraised value. My finances, income, credit history are all in order without issues for best rates. Typical 20% down.

The loan is in the final stages and received prelim approval last week and expecting final this week. Close is in 3 wks.

I get a call from my broker that the underwriter reviewed the Appraisal and the appraisal has "deferred maintenance" on the inside (carpet, tile), outside (Soffit). He gives me the impression that they would like this fixed before closing.

This makes no sense to me
#1 - all of the rental properties I had these same issues and it was never brought up b/c it appraised at sale price
#2 - All older homes will have these deferred Maintenance. If the seller fixed all of these, he would sell it for a Higher price
#3 - Who cares about these deferred maintenance. The place is livable, and not a hazard. There were tenants in it for years without issues. Everyone has deferred maintenance in a house.
#4 - The house appraised over Sale price. Even if I did nothing to it, the appraisal states I could sell it over what I am buying it for.

Has anyone heard of this and how can any lender expect the buyer to fix all of the deferred maintenance before closing?

Medaggie said:

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He gives me the impression that they would like this fixed before closing.

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You need to ask for detailed clarification on this.

I am trying to get details from Underwriting today. House is rated C-4 and structurally sound. Would underwriting be satisfied with an amount in escrow to fix after closing?

The only person to fix this right now is the seller and they will balk at putting money to fix these cosmetic issues. Also, I will be doing an extensive rehab after closing and would have to tear out alot of the cosmetic fixes.

Is the appraised value as-is or subject to the deferred maintenance items? If the value given is subject to the repairs being done then the as-is value is lower. Although, based on the numbers you have provided it would have to be some significant repairs. I'm betting this can be worked out by getting clarification from the Lo and underwriting.

The appraisal doesn't state as is value or subject to. Just strange to me b/c the land is over 80% of the value with the home less than 20%.

I am putting 20% down so I am well covering anything that could happen to the value of the property

I've been mortgage for 14 years and never seen this. Contact the appraiser and see if he will amend the report to 'as is' for his value. Ask your broker to contact the underwriters to explain exactly what they want. Weird

I have never seen this either. I should get an update from the underwriter and if they are unreasonable, I will just go to a local bank that will keep the underwriting in house for quick close. I have less than 3 wks now to close and won't be able to get any big box to do it.

Any suggestions for a local bank in Austin?

No good suggestions since I want the deals myself and rarely refer. Credit union is my best guess

Medaggie said:

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The appraisal doesn't state as is value or subject to. Just strange to me b/c the land is over 80% of the value with the home less than 20%.

I am putting 20% down so I am well covering anything that could happen to the value of the property

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If it is a standard residential appraisal look at the bottom of page 2 and it will tell you if it is as-is or if not, what must be completed.

Quote:

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Is the appraised value as-is or subject to the deferred maintenance items?

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This is the biggest issue. Look right above the value on page 3 of 7 of the actual Fannie Mae form, in the reconciliation section.
There should be a section with a couple of check boxes that say "As Is" or "Subject to"

What does yours say?

beerag04 said:

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Medaggie said:

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The appraisal doesn't state as is value or subject to. Just strange to me b/c the land is over 80% of the value with the home less than 20%.

I am putting 20% down so I am well covering anything that could happen to the value of the property

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If it is a standard residential appraisal look at the bottom of page 2 and it will tell you if it is as-is or if not, what must be completed.

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This. If the report is made "As-is" then this is all on the lender. The appraiser has nothing to do with the request.

Also check out the report addendum section. When lender/underwriters/amcs have questions regarding the property it is addressed there usually. You might be able to see the back and forth between the two groups regarding repairs and whether or not the lender "convinced" the appraiser to switch the report from as-is or subject-to.

Thank you for all of the advice.

I looked AND it states. AS IS

then the repairs should be baked into the value. the u/w is full of....you know what to insert here.

I don't think there is any LOGICAL problems but dealing with any big agency/underwriter doesn't mean that things are logical but just scripted answeres.