FHA Appraisals and the Rules
Lately in my area there has been a tremendous amount of miscommunication and misinformation with FHA appraisals. It is so rampant in our area that I've decided to post the drama.
Schaumburg IL - Townhouse listing of mine does not appraise out and is $5000 under contract price. Seller does not want to sell at the appraisal price and the buyer doesn't want to pay the contract price. Deal dead which is easy enough. Buyer #2 comes along with their overzealous buyers agent, let's call her 'Gloria Go-Getter'. She's overcaffinated, overconfident, never listens to what is being said and is constantly on her 'crack berry' answering those important emails. Buzz, buzz, buzz, there she goes.
After negotiating this new offer at the appraisal price (I surprised her with that BTW) she said, sure I guess we'll use it. You guess? Sorry Gloria, the appraisal is good for 6 months on the property so yeah, we're gonna use it. Then the contract goes to the also overcaffinated loan officer, 'Busy Bruce', who begins the conversation with - "You don't know what you're talking about, I want a new appraisal done". So now we have Gloria Go-Getter and the loan officer telling me I am blocking the contract by not letting a new appraiser into my listing.
Now I'm thinking to myself, this can't be happening right? This 
FHA appraisal guideline is as old as dirt, how can they not know about it? Well it turns out that the loan officer wanted me to manipulate the FHA system that assigns the appraisals and case numbers. The loan officer is telling me that the appraisal no longer has a case number and they don't want to use it. Well I get the original appraisal from the original loan officer and indeed there's that case number and all the appropriate information necessary to make it valid. Hmmmm.
Did the buyers agent and the loan officer plan this? I think that having the appraisal already done was not in their collective game plan. I think what they expected was that the townhome would not appraise out and the price would be adjusted downward. Their only option was to fight the current appraisal. Problem is, we can't just get another new FHA appraisal on a property and I wasn't going to do anything funny with the FHA assignment system.
Besides, I've heard that the federal penitentiary accommodations would not be adequate enough for little 'ole me.
I've uncovered some interesting things from the FHA Help Line (FHA Connection) and they were very courteous and answered all my procedural questions. I wasn't loosing my mind and indeed the appraisal was still valid and in the system. Why all the drama? Was I just supposed to forget about the 1st appraisal? Why would I just ignore it?
What would the penalty be if I did turn a blind eye? So the deal finally closed and I can honestly say I'm not sure what this agent was trying to accomplish. All the way to the end, she was adamant that we didn't have to honor the appraisal.
I'm not gonna miss Gloria Go-Getter.
I find it very disturbing that "non-professionals" are willing to try and bend or flub the rules to make deals happen they way they want them to go. I think that there are clear guidelines that we should all have to follow and I am 100% sure you were in the right based on the scenario.
When are people in our industry going to realize that their petty actions to make a buck and get ahead bring down the overall character perception that the public has about our industry. What is even better is a situation where your Gloria Go-Getter would have been successful against a less experienced agent and that buyer then tells their friends "This is how out agent got us a better deal on our house" and all of sudden that practice is expected to be the norm rather than the rules.
Congrats on your closing! Thanks for the reminder on length of FHA appraisals.
Lyn - Good Grief! It's people like this Realtor & LO that give the rest of us a bad name. You would have thought that sleaze bag idiots like this would have been driven out ofbusiness by now but NOOO - they're still here slithering along.
Well, congratulations on getting it closed (and not landing in jail).
PS. I think super caffinated Gloria go-getter works in my market area too...imagine.
It seams that we all have to deal with this agent in our areas...not much we can do about it!
Donne: I feel that the LO was the worst offender, he was the one that should know his business 100%. No excuse for him.
Bill & Kathleen: They are all over the place!
Wow! This is a word to the wise. Thanks for sharing.
Will: Live and learn they say.
I can't imagine an appraisal being good for six months. That would seem to indicate that Realtor comps are good for at least six months, too. What Realtor uses comps that are six months old?
Russ: Thanks for the cute Zoey pic BTW. She's so innocent.
Hey, sometimes you have to use comps that are 6 months old even a year depending on the subdivision. It's not really that odd. The new FHA rule coming out soon will be only 4 months because in the market changing prices either up or down.
Lyn, amazing story. Good for you for doing your FHA homework - your sellers were fortunate to have you on their side. Congrats!
Kathryn: Too many loan officers let alone agents don't seem to know the rules. OR they expect they can bend them.