Here’s the basic scenario:
Buyers find a house. Buyer and seller agree on the price. Appraiser “suggests” a slightly lower price, and buyer and seller agree to agree with the appraiser.
(Cue the ominous music)
Enter the underwriter, who has determined that only he, while pushing pencils wherever his office happens to be, knows this home’s true value. “This home sold for $83,000 at a trustee’s sale six weeks ago,” he says knowingly. “Therefore, it can’t possibly be worth more than that now since no improvements have been made.”
Except improvements have been made. The seller has a stack of receipts but, even more importantly, if you have any experience with foreclosed homes you know the instant you walk in the door that this isn’t the home that was purchased at the trustee’s sale. The smell of fresh paint is a giveaway. The pristine tile through most of the house also might be some sort of a hint. Did we mention there are no telltale holes in the drywall?
The underwriter would notice this himself, if he weren’t pushing pencils at his desk. After all, he’s the only one in this buyer-seller-appraiser-underwriter loop who hasn’t set foot inside of this house. Never has, never will. But he knows the value far better than those that have because he can look up the trustee’s sale on his computer.
Meanwhile, there’s a seller scrambling to turn the receipts into pdfs and buyers who had been less than a week away from moving into their first home now wondering if they’ll be allowed to purchase this home after all.
All because the underwriter knows best, all from the safety of his desk somewhere else in the United States.
[tags]Phoenix real estate[/tags]