Profile picture for sheehanje

Appraisal Issues, what to do?

I just got an appraisal report back on a house that I have a contract on.  The house was listed in MLS as a 4 bedroom 1 family, but it was appraised as a 3 bedroom 2 family (which is what the title says it is).  It is currently used as a 1 family which I intended to do also.

The appraisal came in a little low (123,230 compared to 129,330 that I was paying).  That doesn't seem insurmountable to overcome.  What is bothersome is this is an FHA loan, and there is about $3500 in repairs.  The contract states the seller is not responsible for any single repair under $1500, which there is none on the report.  So if I took the house I'd be stuck with that.  There is a reason I'm doing FHA, I don't have a lot of cash reserves.  The most troublesome thing to me, is one of the repairs is to add a door to separate the "units" from the foyer.  I don't want to separate the units more, in fact I want the opposite.  I was approved for this loan when it was considered a 4 bedroom 1 family, so the extra income of a rental unit is not needed.

What are my options here?  Should I walk away?  If I do walk away, do I loose my earnest deposit?  They listed it wrong, not me.   I like the house - but not as a 2 family.  It's in a location that is VERY desirable to me.  It's the size I was looking for, and I see it as having long term potential - but I don't want to split this up more than it is.

  • March 18 2014 - Scotia
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Answers (2)

Usually agents have access to tax data at MLS where is states what kind of structure it is- single family/ multi fam etc. if the mortgage was put in contingency in your binder they can not keep your deposit and yes, you can either ask for credits or walk away.
  • March 18 2014
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Profile picture for USMortgageRanger
If so are so committed to the home in your mind the seller must reduce the price in order for the loan to qualify as FHA ready. If the seller is not willing to reduce the sales price then its time to walk away and no they cannot keep your earnest money. Who is your Agent that you are working as your Agent should have seen this coming as you describe it. Maybe its time to find someone to help stare you right.
  • March 18 2014
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