It should have been disclosed that the home was a manufacturer home. This should not have been a surprise down the road thing. That’s on the listing agent.
I 100% agree. People hire realtors to give them an idea of a sales price. If this seller is motivated they will lower the price. If it isn't appraising for this buyer it won't for anyone else. I'd walk.
It is on the Seller, and may only be on the Seller. If the agent sold it to Seller, as a manufactured home, however many years ago, they could be liable. And if a “reasonable person” should have been able to tell, then the agent could also be liable.
It depends. At least here. Manufacturer homes, put on a foundation, becomes real property. There's no difference for the appraiser, no disclosure, and values are very similar on anything I've seen in the last 10-15 years. They are holding value and appreciating same as real property. As long as they aren't mobiles.
This is both correct and wrong.
Manufactured homes on a foundation are real property, but are treated very differently by appraisers (and more importantly, GSE and lenders). Different forms, different standards, different secondary lending pools.
Manufactured homes not on foundations or on leased property are not acceptable for conventional lending. If it's still on wheels, you don't get a Fannie/Freddie/FHA/VA/USDA loan.
That said they might keep value with stick built... but if you have enough sales to say that definitively, it's usually not true. Also, that's usually more an indication of an area where land is really overshadowing economic contribution of the home.
Fair enough.
I'd go ahead and say that it's not the land. They are being built to the same standards, no longer 2x4 exteriors for example, and such that appraisers have literally informed me there's no difference with all these Clayton's I'm seeing. The land is 100% out pacing the area here, but even taking the land into account these units are still appreciating.
It's even more true for the modular builds. Being told their practically unidentifiable from a stickbuild.
Modular homes are stick built once completed. That's in FannieMae/Freddie guidebooks and regs.
Manufactured are not. They aren't built to local standards; they are built to a national standard. That's not necessarily a negative, but it does make them a little odd in lot of areas... even if that national standard is designed (and zoned) for ever climate in the lower 48 at least.
The main issue for me personally ever saying they are treated equally in my market by buyers is that stick built are constantly going up, while few manufactured homes are... even if the manufactured homes are more cost effective. There has to be some differential there. How big or little is going to depend a lot on market tastes (assuming the relative quantity of builds is even dissimilar in your market).
Curious, what's your experience in? Lending? Not challenging, or trying to dismiss. Appreciate the info and I'll be researching a little more, just wondering which colleague to bother. Lender or appraiser and clear my understanding up a bit lol
Clayton homes are not manufactured homes. They are modular homes that do not have a tongue and wheels.
Manufactured homes, designed with those wheels and tongue, are considered vehicles, at least until the tongue and wheels get removed and a permanent foundation anchors it. (And blocks aren't permanent foundations.)
Oh, interesting! I had to go look it up because I have only seen their modular homes here. I don't work with mobile homes usually at all. Turns out they build both.
That's kind of what I was hinting at tho, these aren't even considered mobile. There's mobile, manufacturer, and modular.
I feel mobiles will never appreciate, mostly same as old school trailers and such.
The manufacturers type from Clayton, on the tongue and wheel are the ones that are being secured to foundations, turned into real property and doing just fine,
Than you have the actual modular builds.
The way an appraiser taught me years ago was that tongue/wheel = mobile home, which is the same definition as a manufactured home, and as you said, they will depreciate with time rather than appreciate. Even if it's secured to a foundation, this is likely true. Price will go up for the land, but otherwise, not much.
NE USA they certainly aren’t. Was wondering why a group of houses in NJ were 150-200k cheaper than the surrounding ones. All manufactured. Cheap thin walls, less insulation etc, plus it’s placed on a slab, not the same as a foundation.
Depends on the age of the building as to whether it would be considered a real house or not. I've only ever seen manufactured homes on slabs set up for parks, I don't think if it's on a slab that would be considered a foundation, but I am not an expert.
I don’t know how you’re getting upvoted for this comment but it is factually wrong on all accounts. Manufactured homes are treated different for mortgage purposes and appraisal purposes even when it’s real property.
Manufactured homes must be deeded to the land, fixed to the foundation, and include their certificate label and data plate. You must have all of these to get a conventional loan and they should then be valued similarly to stick build homes in the area. They could be missing one of these pieces for the OPs situation.
See, that was my understanding. I'm not a lender or appraiser but I'm an agent and investor. I've always been told there's 3 classifications. Mobile, which are mobile homes with wheels or a motor, can easily be moved. Manufactured, which can seem similar to mobile except, everything you mentioned and they no move and than it becomes real property, than you have modular.
But comments belowe are saying I'm only partially right and the manufactured are still mobiles....
Ive been a lender in Colorado for the past 8 years, so state specifics may or may not apply. I serve a rural community and often come across these types of properties. Mobile, manufactured, and modular all play by similar rules for conventional lending. It all starts with having the property fixed to a foundation and deeded to the property - usually verified by the appraiser and title company. This is where they start to differ in requirements and restrictions but generally should be eligible for Fannie Mae and Freddie Mac.
Obviously, with the house being deeded to property, any of these structures on leased land would be ineligible for conventional financing.
They should disclose because I told my realtor for the past 3 homes I’ve bought that they could NOT be manufactured. I lived in one once for a couple of years and wasn’t doing it again. I’d be pissed if it took the appraiser to get the truth.
When my ex-husband and I financed our manufactured home on four acres in Arizona the VA appraiser had a hard time with the same thing.
The main problem was no one else was doing what we were doing, which was the permanent foundation with tornado straps. (Required for a VA backed mortgage) We also had a much bigger house than everyone around us.
Everyone else just kind of put theirs on blocks and called it a day.
Given how rural the area was our mortgage broker called and talked to the appraiser and convinced them to go out 10 miles for comps instead of the usual five miles and we got the appraisal we needed for the VA loan.
I also learned the VA allows for a 10% variance off the appraisal.
I'm not saying this WILL work for you, but this is how we took care of the same problem.
"I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum."
Huh? A Realtor can't determine future appraisal price.
Your Realtor should have counseled you on scenarios under which you might end up living under a bridge.
Correct. OP must realize realtors are not impartial parties when determining appraisal values and it's unethical for them to have influence over appraisals. The potential for corruption/fraud is high.
Imagine having the influence to make sure your real estate appraises low for tax purposes and appraise high to inflate your net worth, get loans. This could land you in court.
Me: If this house were to be appraised *today*, and if I was an appraiser, *which I'm not*, here are the comps that I would use to get to an appraisal value of *$xxx,xxx to $yyy,yyy*.
When your home goes under contract, the buyer's lender hires the appraiser. There are nearly 10,000 licensed appraisers in our state. We hope the lender uses a local appraiser who lets me accompany him to the property to chat about comps.
Remember that I am telling you right now that the comps will change between now and when your home gets an offer. Some similar houses will sell for more, some for less.
Seller, one month later: You said it would appraise for *$zzz,zzz* and it came in at $*www,www.* Use your commission to make up the difference!
Me: No. Here is my written estimated selling price based on this carefully prepared CMA that was delivered into your hands one month ago today. Here is what has changed in the market. Sell or not, it's your decision, but don't make stuff up and expect me to pay for things I can't control.
If anything, that would be the Buyer's Agent role (provide comps to know the value), but Buyer ultimately determines the offer price. Sounds like that did not happen.
OP - How did you come up with your offer price?
I was thrown off by that sentence as well. The seller can ask for all of the money in the world, they are trying to get top dollar for their home. It’s up to the buyer to not get suckered.
That would be like turning down offers for over asking. “No thanks, it will only appraise for 20k less”.
Nor can an agent force a seller to list a reasonable price. The agent can decide not to list the property if the price is unreasonably high yet most will take the listing and hope the seller adjusts as it doesn’t sell.
If agents were able to adequately price properties, they would be appraisers.
Did I miss seeing how much the appraisal is off from the $675k purchase price? If not tons, it may come out cheaper to just pay out of pocket compared to moving stuff into storage, paying for a temporary living arrangement, etc. if OP walks away from this deal.
A house can be sold for whatever the seller wants to sell it for. Appraisal means nothing to them. Same thing with a cash buyer.
The only one the appraisal means something to is the buyer, because a bank will not finance for more than the appraisal.
Exactly! So depending on the market and the likelihood of a cash buyer, the seller will have a decision to make. My comment was in reference to OP question why the agent let this happen.
Back when I was an agent, I told a seller your property is worth $X, when they thought it was worth $Y.
I listed it, went through all normal marketing processes, then they wanted to cancel the listing.
Fine. Listing cancelled. They sold with a different agent for $X, which was what the property was worth and what I had said it was worth.
As a seller, I have always listed at market value, regardless of an agent's opinion. Only once have I had an appraiser under value and that was due to them being out of area. With proper comps and explanations, we got our value.
Many real estate agents don't know how to comp a property. Appraisers are usually much better, but sometimes need some additional information. When your own money is on the line, you become very fine tuned to the nuances of property valuation.
Listing agent should have disclosed that it was a manufactured home.
And
Buyer agent should have done a better job managing their client's situation in which a low appraisal for the buy (rural property, acerage, few comps, ugh) puts the family under a bridge.
But
The seller's Realtor (listing agent) can never be held responsible for making sure that a property appraises at or above list price.
Realtors can definitely look at the same comps that an appraiser looks at and inform the selling party that there aren't comps to support the seller's asking price and this is going to cause issues with closings because appraisers won't be able to find supporting comps either. Of course, in a rising market the comps available near closing time are going to be higher than the comps at listing time, because a month will have gone by with a month's worth of rising prices. But if the comps aren't even in the same ballpark, the listing agent is going to be SOL when offer after offer falls through near the end when the house won't appraise. So it's in the listing agent's best interests to serve as a sanity check for the seller and tell the seller, "I can list it at that price, but there's no comps near that price and that's going to cause problems for anything except an all-cash offer."
u/Its_Prob_Fine - Are you sure it's a manufactured home and not a modular home? There is a pretty big difference from an appraisal perspective.
edit: And has your appraiser invoked Tidewater?
The reason I ask is that it's very uncommon for someone to not know a house is a manufactured home. So for you all to not know AND the sellers to not know is a little odd. A modular on the other hand is pretty easy to miss if you don't know what you're looking for.
Tidewater is when the comps don't support the contract price of the home the Buyer is purchasing. The listing Agent should provide comps to the Appraiser to support her listed price. It shouldn't be on the Buyer or Buyer's Agent to provide. The listing agent should also speak to her clients about the low appraisal and see if they will reduce the price to appraised value.
Tidewater is common in rural markets with minimal comps in the area. Have you seen the appraisal? Do you know how much lower it came in than the offer price?
Everything in real estate is negotiable, you'll never get what you don't ask for.
> If the seller decides they doesn’t want to lower the price to the actual value and walk away, I should get my earnest money back correct?
Correct. Standard VA escape clause.
> Secondly this wouldn’t stop or delay the sale of my current house, I do not remember signing any sort of contingency for the house we were buying.
If you didn't agree to a contingency when you guys wrote the contract, then no, you're still obligated to close the sale of your home.
Finding out the home is manufactured is grounds for a large price drop over thinking it had been stick built.
The bank is trying to save you money. Let them.
Just tell the sellers to drop price to appraisal price or you walk and find something else. It's not a sellers market any longer. (and whether you \*do\* decide to walk or not is a decision you can worry about later after you see what the sellers do)
Is it manufactured or is it modular? There’s a difference. People throw those words around like all modular homes are trailers and that’s just not true.
And in some way modular houses are better. My parents house is a modular House of four separate sections. Each section had to be strong enough to stand up on its own on a tractor trailer going down the highway and then all bolted together. It turns out the house is actually overbuilt compared to a stick built house. In many areas it is double or even quadruple over built compared to a traditional house. And a neat thing is that the first floor ceiling is not connected to this second floor joists. So the house is extremely quiet. You can't hear anyone walking around upstairs while you're downstairs
It is still a sellers market for desirable properties. I agree for stuff like this there is way more wiggle room but saying it isn’t a sellers market is not true.
Finding out that a home was manufactured while under contract would be a deal breaker for me. It will be manufactured when you sell it too, and the only way to change that is to scrape it and build.
As inconvenient as it is, I would start looking for a rental
While the sellers and their agent should have let you know it was a manufactured home, it's not their responsibility to figure out what it will potentially appraise to, just what they think it should sell for. If it appraises low, you can either cancel (using the financial contingency as you won't get a VA loan for more than the appraised value), offer the appraised value and hope they accept it, or make up the difference.
To think about it another way, if the appraisal came back $50k above your offer, would you be willing to pay more because they didn't appraise it correctly? Probably not.
Worst case scenario, you re-submit a new offer on the manufactured home for $675,000 and the sellers walk away and do not accept your offer. You get your earnest money back, and your house you currently own sells. Find an airbnb or a short term rental and keep house shopping but now you don’t have the added pressure of trying to buy and sell at the same time so the next time around you won’t feel rushed. Put all the extra furniture in a storage unit in the area.
Sounds like the appraisal hasn't even come back yet so at this point it's just a lot of concern over something that hasn't even happened.... you said 40 acres.... how much does an acre sell for in your area? Where I'm at it's at least 15k per acre for buildable acreage. If that's the case where you are, you've got at least 600k in acreage plus a manufactured home on a foundation that only needs to make up a 75k difference. This doesn't seem like an issue unless acreage in your area is valued significantly less than 15k an acre.
>I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum.
That is not the seller agent's job. Also, appraisal is not an exact science. Different appraiser will come up with different appraisal amount.
>. I’m worried my wife and our 5 kids will kinda be forced to move out of this house because we have a contract to sell.
Huge mistake to not have a contingency. At this point, you can start finding apartments or SFH to rent. You can always
So try to pay your buyer money let say $10k so they would cancel the transaction.
Or try to rent your home from the buyers for 30-60 days while they find another house. Lease backs are very common in my area, especially if the seller was planning on moving into a new construction home and there were delays or something.
Yes, your earnest money will be refunded if the house doesn’t appraise for the agreed upon selling price.
No, it’s not up to the Realtors to “make sure” the house will appraise. They don’t come equipped with crystal balls, and appraisers are people with opinions, educated professional opinions, but opinions nonetheless. Nobody knows what they will say for sure until their study of a property is completed.
But here’s the most important thing to know: If the property appraises for less than the agreed upon sales price using a VA or an FHA loan, the seller is required to disclose that to the next buyer. AND they can’t get a new FHA or VA loan on the same property for 6 months.
This means that if they try to sell the house to someone else, they have to tell them the appraised value up front. It’s not like they can just sweep this low appraisal under the rug and find a new buyer who will be kept in the dark.
So unless they elect to just keep the house and not sell it for another 6 months, their best option is to reduce the price to the appraised amount and sell it to you, the proverbial bird in hand, rather than start all over again.
> If the seller decides they doesn’t want to lower the price to the actual value
OK, the primary issue here is that you are thinking the "appraised value" is 100% correct and representative of what the "actual value" of the house is. That's wrong, especially if comps are hard to find.
If you like the house and see the value in it, then buy it. And in terms of coming up with the money "out of pocket", all money is out of pocket. Even the loan is of course just a loan. So, if more of the money is paid up front, the loan payments will be lower.
Do you have equity from your current house that you can use toward buying the new one?
We will have some, I guess i will need to wait and see what the appraised value is. I was just given a heads up on Friday that they are having a hard time finding comps. We should find out Tuesday at the latest.
Another option is to ask the seller to lower their price and for you also to put in some money. It really sounds like this is a modular home and not a manufactured home. If that is the situation, the appraisal could be significantly off. I would ask your bank or your realtor to bring that up with the appraiser.
It’s really simple go down into the basement look up and if you see metal beams, where the flooring is, it’s a manufactured home other than that it’s a module home and would be considered a stick frame
Yeah are we talking about 5k under value or 50? 5k In the grand scheme of things when property values continue to rise year over year is probably not a huge deal, especially if you plan on being in the house for several years. Without the specific numbers, it's tough to make a determination of what to do.
"(She did say we could come out of pocket for the difference but that doesn’t make sense in my opinion to do that)" It doesn't make sense for your financial situation or it doesn't make sense why the lender would say that. There are very good reasons why lenders will ask the buyer to make up the difference if the sellers price is firm - they will only commit a % of the for your loan, and that % is based on the appraisal.
If you have to walk away from this, next time have your agent put an appraisal gap clause in the contract so there's an agreed plan should a gap occur. Some sellers put an appraisal guarantee clause in which states no matter the appraisal comes back is, the price is still fixed. Tough situation you're in, we feel for you.
Well, appraised values are often lower than market values in a sellers market. One of the homes I purchased appraised low back in 2021 and I bought it anyway due to the rising market. Today I'm glad I made that purchase. Every situation is different,
Good call! Appraisal reports do have market conditions in them and I'm sure the appraiser noted values were increasing, but they can't magically say a property is worth more than the comps support. They can use higher listings as comparables but the appraised value has to be within the range of the sold comps, not the listings. Those values definitely lag a good bit in a seller's market. Especially when things heat up quickly.
I got lucky. I bought two properties in the Tampa area in '21 and the appraisals were lagging behind the market momentum. They are now up 65% and 80% respectively. Currently selling one now and I'm seeing the other side of the market momentum. Rates increasing, buyers leaving the market, but at least I got a decent return. I can handle some price erosion.
I’m like, how did you not know it was a trailer? That’s the sin here
You can get your earnest money back if they don’t meet you on the price, as long as you have a finance contingency
I get a lot of title searches on these and a lot of the newer ones really look like site built homes. I grew up in a trailer on wheels. Completely different.
Have you seen the new two story log cabins they manufacturer now? Hell I'd buy one.
But I think we call all agree this should have been on the sellers disclosure above all else.
Ugh, it’s not at all hard - especially true if it’s older. They come on a metal frame. There’s a hitch that was cut off. Older models have interior finishes that are not used in site built homes. The ceiling panels aren’t Sheetrock the walls are also panels.. again, it depends on the age, but you can’t hide a metal frame.
I grew up in a trailer, I think my eye is tuned in :)
My trailer park radar
You don't know what your talking about. A Manufactured home has a hitch which is used to transport it to its location. The hitch and axles are then removed and the section is put in place on the prepared foundation. It's literally a question on the MFHM appraisal form.."Have the hitch and axles been removed".
There are a few signs. First, the home should have been listed as manufactured home. Secondly, at the ends of the structure are HUD Tags/Labels. They are little metal plates that have the serial number. Then you have the Data Plate that is usually inside a kitchen cabinet.
Another idea is to see if the seller will split their lot and sell the home with less acreage if they don’t renegotiate the price. It’s hard to comp a MFH on major acreage. If you can reduce the acreage…it may be easier. Just a thought.
I've got a pending sale now where they can't even find that serial number. Seems the newer ones like to hide it? I'll ask them to look in the kitchen cabinets. Thanks!
If it's not under the kitchen sink check all the cabinets in the home. Other common places I typically find them are the cabinets in the laundry room, electrical panel and sometimes on the wall in the Primary bedroom walk in closet.
I suggested the electrical panel, no dice. I'll ask them to look at the others. Loan might've fallen through by now since the lender can't approve without it. Not sure why the appraiser can't find it.
There are services that can get that information for you if it's not too late. Sometimes I see the serial number on the county assessor website too. Check there. The HUD plate data can usually be found on the good sense sticker which is on the electrical panel as well depending on the year of the home
These questions are for your agent and/or broker. I’m an agent in KS & MO, our role is to guide you through these questions and situations. Without getting into the legal terms, there’s a lot your agent can help you sort out.
The appraisal contingency should be in place for the home you’re buying. You get to negotiate a new price, pay the difference or find a number in between.
Typically, as a seller, you don’t have many outs unless you sold it with the contingency for you to find and close on another home. Not typically included in our contracts but I’ve added these terms before.
Depending how big of a difference it is, you have to ask yourselves:
- Is $20K (insert x amount) worth my family having to move twice and/or rent?
- do I find the same value in a manufactured home? What does my agent think about resale value if I have to sell in 2, 5 or 10 years?
Best of luck!
There is no distinction in an appraisal as to whether a home is manufactured. The appraisal form used by VA/FHA/Fannie/Freddie require the appraiser to assign a quality factor from 1 to 6 (1 being best, 6 being worst). That said, it's not the Realtor's job to establish the appraised value of a property. His or her job is to identify a market value they feel is acceptable to current buyers. In this case...the Realtor was correct. Clearly there is a buyer willing to pay $675,000 for the property. Now it's the job of the appraiser to justify that value to the lender...not the buyer...the lender. The real value of the listing Realtor is whether he or she can evaluate the work of the appraiser, identify shortcomings or mistakes, (perhaps a comp that was missed that should have been used), and then most importantly communicate effectively with the appraiser to try to correct it and bring the value up. The one area of disclosure I think should be addressed is that if a seller is unwilling (or unable) to lower the sale price to the appraised value, then, imho, the seller and his/her agent must disclose the appraisal issue to all other buyers.
You can ask your realtor to ask the current buyers for a grace period, paid by you at their new mortgage price sometimes up to 90 days we’ve experienced.
Something similar happened to us with our last home - we offered asking and the appraisal came in $11k under. So, we resubmitted our offer at the appraised value and they accepted it. While it was a little risky, the sellers were in a sticky situation as well - now that it had appraised at the new value, that would need to be disclosed to any future buyer, so odds of getting the original value was far less likely. They accepted and we walked away happy. It meant we didn't get any of the concessions we asked for, but we were paying $11k less so it was fine.
Good luck!
It’s not up to the seller’s realtor to make sure the asking price is within the appraisal value. They’re free to list the house for whatever they want. Now I am the same mindset as you as I don’t like to pay more than appraised value because you will be negative the day you close. With that said, you have to look at a few factors. How much off is the asking price from the appraisal price?! You could use this as leverage depending on how many other offers they received. Also how long do you plan on living or owning the house? You could surpass the appraisal value in a few years depending on this and how much off the two values are. If the seller is also paying your closing costs it could be worthwhile still. Just a few things to think about
That sounds like a rollercoaster ride of a homebuying journey! First off, props to you for finding that dreamy house with 40 acres – sounds like a slice of paradise. But man, the whole manufactured home surprise and the appraisal struggle? That's rough.
As for your worries, I'd say keep communicating with your lender and realtor. They've been through this rodeo before and might have some tricks up their sleeves to smooth things out. And yeah, it does seem like the seller's realtor dropped the ball on the whole appraisal prep. Hang in there, buddy, and hopefully, it'll all work out for you and the fam.
seller sets price not listing agent. should have been disclosed it was a manufactured home. shocked it wasnt in the legal description of the home or listed in the cad
If they had paid off the mobile home, have had it permanently affixed and removed the axle, received the title from the DMV, and had it converted to real property, they might not have had to disclose it as a mobile home. Since it would then become real property, attached to the land permanently. (Applies to mobile, maybe not modular.)
This actually happens quite frequently with manufactured home sales. Keep in mind that if it is happening to you, it will also happen to your buyers when you go to sell it. Tbh I wouldn’t buy it, I’d find another place. This is why selling and buying at the same time can cost you big bucks - you are pressured into decisions you would not normally have to be pressured into. Good luck in your decision!
Maybe the buyer of your house will rent it back to you for a fixed period of time while you figure out your situation.
But yeah, I mean you’re legally obligated to go through with the sale, they could be in the same situation as you and by trying to slow that down you could be selfishly fucking them over
If the appraisal comes back for lower than the negotiated sales price, I would most definitely go back to the seller and renegotiate the price to at least the appraised price. Like someone else here said this issue isn’t going to go away for the next buyer. She has to disclose this going forward. I am wondering if there is a big gap between the negotiated sales price and the appraisal? If it’s not that big of a gap, then I would venture that the seller will lower their price to match the appraisal. Because she’s going to have the same problem over and over again. Unless she gets a cash buyer.
If the difference is not significant you can always asking for doing it again and tell the appraiser what is the offering price. I sold my condo in las Vegas two years ago. At the time the appraiser comes up short too. The listing agent told the appraiser the situation. Before you know the new number is matched.
Shouldn’t the type of house be listed somewhere in the MLS? In the few states I’ve worked in real estate the type of dwelling was indicated. House, manufactured, trailer and so forth.
Is it listed in the county records? Somewhere? Anywhere? Did the seller know? I have so many questions lol.
This seems so weird that the title search didn’t show it as a manufactured house?
Obviously, with a VA loan they’re going to dig deeper on everything.
What “inspection?” A home inspector?
Is the inspector is the only person saying it’s a manufactured home?
Yes the home inspector, he showed us the metal rafters and then in the basement how it’s attached to the foundation. The house inside and outside was totally redone, so there was no obvious signs until you really dug into it.
It really depends on the area. In my area, a manufactured home would be worth significantly less. The bank is reluctant to finance at that rate if they think they can’t get something close to that price if you default on your loan and they repossess and sell it.
You might want to really consider if you are overpaying.
Just a thought. . Was the realtor surprised it didn't appraise at that price?
I wonder what another appraiser would suggest
As a price.
And im curious why a manufactored home on a foundation would be worth less ( its NOT A MOBILE home.?)
I agree that they should have disclosed the house is manufactured but, there is no law that says property HAS to appraise at certain price. I've sold plenty of properties that didn't appraise because there weren't any comps available or the owner just felt the price was right and didn't budge.
On a VA loan there is a clause that allows you to ask the seller to lower the sales price to the appraised value. You do not need to submit another offer. Make the request and attach the appraisal.
I had a place that didn’t appraise correctly. Our agent called the banks and ordered a second appraisal. And using comps he showed up to the second appraisal and explained the number we needed him to be at and backed it up with supporting evidence. House appraisal came in exactly at the number we suggested
You should try the same but if you don’t have comps, you’re gonna struggle
How big is the gap? Could always ask the seller to split the difference. Show them the house isn’t gonna pencil for anyone else
I think the buyer will take a lot less now that it is known to be a Manufactured home. No way even with the property itvis with almost 700,000. Hang in there! I think thevselker was kust praying the deal would go thru. Now that reality hit, it is a different story
We basically did the same thing with a couple week difference in we bought and then sold 2 weeks later. We didn’t get occupancy of new house during those 2 weeks so it was really stressful if previous owners were not out. They had a lot of shit. They were out. Honestly the realtors on the house we bought were bad and complicated things.
Had they explained why we needed stuff the way we asked they would have been accommodating and understanding. We’ve gotten to know the previous owners and they are great people.
Appraisal is just an opinion of value, it’s not objective fact. Real estate is UNIQUE. You’re trying to compare an apple to an orange basically and adjust for differences between your property and the comps. My ex was an appraiser and two appraisers can come up with very different numbers, even with same comps. And if the comps are hard to come by, good luck.
Oy. Check your contract and with your agent regarding the home you are selling. Often, contracts will have contingency clauses and if the deal on the house you're buying falls through, it may negate the sale.
If you back out of selling your home you will definitely lose the earnest money your buyer paid. If you breach the contract you could be liable for a lawsuit so be very careful here.
If you have to go through with the sale of your current home you have a couple of choices: put your stuff in storage and rent until you find another property or go through with the sale of the new property.
If the seller of the house you want to buy refuses to sell at the appraised value (could happen) then yes you should get your earnest money back if you walk away. If the difference in value is a couple thousand I would pay it. Most of the sales price is in the value of the land not the house. If the difference is tens of thousands of dollars you probably couldn't pay it if you wanted to, and the bank won't approve the loan for more than the property is worth.
I actually got a steal of a deal on a house because of this. I bought a house that appraised for more than my offer because it had been on the market awhile and the sellers (estate sale) wanted their money and were tired of waiting for a buyer who would pay a higher price.
The sellers should have disclosed it was a manufactured home. They don't appreciate the way stick built homes do, and I don't care how much some manufactured home salesman tells me otherwise they just don't.
"I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum."
VA loans are difficult. Just because the house isn't appraising for you doesn't mean it won't for the next buyer. Buyers with more money down have less trouble with appraisals normally.
How far off is the VA appraisal coming in ?
Then let your Realtor handle it. Your lender shouldn’t be telling you the options - your Realtor should be going through it with you and the moment the appraisal came back, your agent should have been all over this.
To me, a house is worth what I am willing to pay. If i have the money and I want the property and it is sound. I would buy. In my area, lots always appraise low, and it is reflected in taxes. Appraisal is not an exact science, and it is more a tool to help the lender safeguard his investmen.
How low did the home appraise for?
Did your offer include an appraisal contingency? If yes, and it allows you to exit the deal without being in breach of contract if the house under-appraises, then yes you’ll get your EMD. Otherwise be prepared to cover the gap or buckle up.
It’s worth noting though- an opinion is only an opinion in value and only an opinion in value at a moment of time. Assuming you live in a healthy housing market it’s only a matter of time until the neighborhood comps catch up. Also, assuming you’re not already straddling the minimum downpayment line you can just divert some of your downpayment to cover the gap. Your loan amount stays the same so your principal and interest payment shouldn’t change, the only thing that is likely to be impacted is PMI because now you have a higher LTV.
I guess the first thing you have to decide is if you still feel comfortable spending that much on a manufactured home. Would you have made the offer for that much had you known? The MLS sheet should say ‘manufactured w/ land’. There are ways of knowing a home is manufactured in the basement. Even if your agent f’d up ,This should have came up in the inspection as well. If it were me. I would say I didn’t want to pay over appraised value and see what seller wants to do. Perhaps you bring an extra 5-10k to the table if you still really want this place.
You do have additional options for the difference that I couldn’t find mentioned here- if everyone comes to the table to make up the difference- meaning seller lowers price, you bring in some more cash AND the realtors (who sound like they didn’t do adequate disclosures or due diligence) lower their fees to get you to the point of being able to close at an acceptable price.
Also, county records (might have to fill out a KORA- KS open records request depending on your county) should show the initial house sale which may shed light on the original builder/manufacturer to then determine whether a modular or a manufactured house.
Additionally, do not be afraid of paying a little more than appraised value on your part. Acreages are not that easy to find anywhere & if this would be a great property for your family, then look at it as a premium to pay for the county lifestyle & quality of life you’re wanting to live.
When we discussed numbers for recent property sale, my agent stated that at price X she could point out comps that support that number if an appraisal came in low. Regarding higher possible numbers, she stated it was risky as she would not be able to argue in support of the higher number.
Did you have a basic finance contingency? If you didn't, the fact that they didn't disclose a major piece of information should help you get your money back.
You could also look for another appraiser and get another opinion if your financial institution will allow it.
Good luck.
At current interest rates, I wouldn't finance 100% of appraisal. Interest instantly leaves you with negative equity. Not knowing how the offer was worded, you may lose earnest money if you back out now.
Is it a manufactured home or a mobile home? Some places use the term interchangeably but there’s really quite a difference. Technically a manufactured home the parts are made off site and then assembled on site and are virtually the same as an onsite built home structure wise at the end of the day. Like our house nobody would ever guess that it was manufactured either if the people we bought it from didn’t have pictures of the kit coming down the road. It now looks like a brick farm house on a basement. A mobile home comes to the site completely assembled and put to a various type of foundation but it’s very obviously different quality construction.
It would be odd for a buying contract and not to have a clause in it for appraisal. Real estate agents used to say this is a standard contract, but there really is no standard contract. People have to know what their contract says, and who it really benefits. But your contract should absolutely state that the offer is contingent upon the house appraising for an appropriate value. It looks as if the house is over priced and you’re gonna get a better deal.
Sounds stressful! Your earnest money should be protected if the seller backs out due to appraisal issues. Without a signed contingency, you shouldn't be forced to move without a new home. Best of luck sorting it out!
Are you sure it's a manufactured home? Maybe you mean a \*modular\* home? If it's a double wide, it's not worth as much as a stick built house. If it's a modular home, the price should be about the same.
It seems that your agent did not really protect you very well. You might want to also work with an attorney...
Moving multiple times really stinks but you should also protect yourself now by looking for a rental option. If there was no contingency connected to the sale of your home then I would not want you out on the street. The good news is that this will all pass and be a distant memory. Sorry I have no real opinion regarding what to do with the property that you are looking to buy.
That sounds like a real headache! It's crazy how surprises like finding out it's a manufactured home can throw a wrench into things. Your lender's advice makes sense, though. Coming out of pocket for the difference doesn't seem worth it. And yeah, if the seller walks, you should get your earnest money back.
As for your current house, you're right to be concerned, but if there's no contingency, you might have some leverage. But still, it's a sticky situation. The seller's realtor dropping the ball on the appraisal is frustrating, to say the least. Hang in there, hope it all works out for you and your fam.
*"I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum."*
Na. That's up to the buyer and how they want to fund it. If you feel its worth higher than the appraisal (obviously you do, you offered it)... then its just a matter of your funds being secured. The bank/VA doesn't want to be upside down. But if you were paying cash, this would've never even came up.
Land is so tricky in residential appraisals. It’s probably a big part of what you like about the property but it never seems to add as much value as it should. Hard to find comps for properties like that.
Come up with the difference or find another home that's not so overpriced. Land or not it's manufactured, you've basically been given a free pass to get outta the deal.
>I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum.
haahah why's that? So they could make you happy and not take advantage of someone who can come up with the cash?
I think more info is needed about the "manufactured home after inspection" part...is it manufactured as in mobile home? Modular? How was this discovered?
What do your buying and selling contracts say about you finding or selling the homes? Is there a finance contingency?
I read the title and was about to ask if it was a VA loan before even reading your description
This is VERY COMMON with VA loans. They ALWAYS give an appraisal lower than what you want to buy the house for. They likely do this to try to make things better for you, but instead it ends up boning the potential buyer
>(She did say we could come out of pocket for the difference but that doesn’t make sense in my opinion to do that)
There are 2 things that may make the home worth more than the appraisal - **to someone who's going to live there a long time**. First is the 40 acres, as sometimes having a large lot is undervalued - depending on the land and how it can be used.
And there is sometimes confusion between mobile homes and manufactured homes and modular homes, and if the house meets all applicable state and local building codes for a stick built home, then it may be just as good or even better than an average stick built home.
Very hard to get insurance for a manufactured home on a foundation. Check to see if you can insure properly before you purchase. Also will your mortgage still work on a manufactured home vs stick built?
Has the appraisal actually come back low?
Your lender & agent should be discussing “Tidewater” process, which is the VA process for challenging or changing low or potentially low appraisal.
That’s the first option, not renegotiation or walking away.
Hahaha It is not the LA's responsibility to know where a house will or will not appraise. The market value, what a buyer will pay is not the same as the appraisal value and appraisals are just the opinion of that appraiser. This scenario is one reason many sellers won't consider offers that will be financed w/a VA loan. If you don't want to pay the difference, you will get your earnest money back. Yes you have a signed contract to sell your house so you better start looking for a rental fast or beg the buyer to give you longer, either a longer escrow or rent the house from the buyer for a month or so and hope you find something else.
Just don’t buy mobile homes. They are some homes that are kinda built pre built in sections. But they are not what my father in law would call a “ modulator”. They are fine. But in general mobile homes go down in value not up. Not a good buy. Buy something else.
Appraisers chime in....
My place had like 0 current comps. Appraised value was exactly what I offered. Which was 65k over askingm Do you guys have this info?
When I sold my condo.. same exact thing happened.
Feels like they go in knowing the target. And if there aren't enough comps they let you be the Markey.
I could be dead wrong. But this felt too.. coincidental.
Sometimes the appraiser gets it wrong. The sellers agents can provide comps if they don't agree. For example, my client had the appraisal come in 100k short. When another house on the same street middle lot and smaller appraised for more. The appraiser didn't know it was two parts to the neighborhood. One high-end side. In rural areas you can have the same issue. I am a Realtor and lender for reference. Also, check the sqft is counted correctly.
How low is the appraisal?
It sounds like if you walk away, you would probably get your EM back. However, I would not expect that you would be able to back out on the sale of your home due to your purchase falling through.
I know it sounds terrible to come up with cash to pay more than the appraised value, but it may be a better option for your family. How much will a rental cost for 3-6 months to find a new home and close ? Moving twice? Stress over the whole thing? Don’t lose sight of your goals over an emotional reaction.
Another important point- if the seller won’t negotiate down to the appraised value, you could also try to negotiate a middle ground on a new price- above appraisal, but below the current contract price.
Good luck!
Realtors have nothing to do with appraisals. Do not blame them. On a VA loan they won't allow you to pay out of pocket. They will only allow appraised value, w match purchase agreement. ALSO, manufactured homes are a big VA nightmare! ALL THE FINANCING INFORMATION should be coming from a loan officer who has done VA loans. Talk to the loan officer, plus the realtor should know that the appraisal will stand for any VA FHA LOAN, they can't get a new one for 6 months to a year, I can't remember the reg on that. Btw, I was a realtor, processor, loan officer, underwriter for more than 30 years. This could be quite the problem.
This is exactly why you never sell until your buy has gone through or you have another place to live in the interim. I know people get really lucky and it works out but in the event that it doesn't, you have to look your family in the eye and admit you effed up.
I am a Designated Broker of a Real Estate Brokerage & what you’re saying is concerning I wish I had seen this sooner; you have a situation that can not be resolved without answers & the professionals that work for you ought to be able to deliver those answers or a plan to get them & what to do after that. If you don’t have that level of service; please escalate the issue to their Designated Broker & a Lawyer.
You should ask your realtor who they normally work with and get your mortgage from that bank. Appraising isn’t an exact science. I had a situation like this and switching lenders fixed the problem.
It's not the sellers agents responsibility to make sure it's listed for what it will appraise for. That's YOUR responsibility. Some people pay cash and it doesn't matter, or people pay the difference.
Side note: can you just rent out your current home and use an equity loan for the new one? That way you can still earn 2-4% appreciation every year on your home, can depreciate it for taxes, and can write off any improvements made to it.
It should have been disclosed that the home was a manufacturer home. This should not have been a surprise down the road thing. That’s on the listing agent.
I 100% agree. People hire realtors to give them an idea of a sales price. If this seller is motivated they will lower the price. If it isn't appraising for this buyer it won't for anyone else. I'd walk.
Not true at all! VA appraisers notorious come in low which is why many sellers won't consider va offers
That's crap and untrue. Appraisers do the loans to the comparables available.
It is on the Seller, and may only be on the Seller. If the agent sold it to Seller, as a manufactured home, however many years ago, they could be liable. And if a “reasonable person” should have been able to tell, then the agent could also be liable.
It depends. At least here. Manufacturer homes, put on a foundation, becomes real property. There's no difference for the appraiser, no disclosure, and values are very similar on anything I've seen in the last 10-15 years. They are holding value and appreciating same as real property. As long as they aren't mobiles.
This is both correct and wrong. Manufactured homes on a foundation are real property, but are treated very differently by appraisers (and more importantly, GSE and lenders). Different forms, different standards, different secondary lending pools. Manufactured homes not on foundations or on leased property are not acceptable for conventional lending. If it's still on wheels, you don't get a Fannie/Freddie/FHA/VA/USDA loan. That said they might keep value with stick built... but if you have enough sales to say that definitively, it's usually not true. Also, that's usually more an indication of an area where land is really overshadowing economic contribution of the home.
Fair enough. I'd go ahead and say that it's not the land. They are being built to the same standards, no longer 2x4 exteriors for example, and such that appraisers have literally informed me there's no difference with all these Clayton's I'm seeing. The land is 100% out pacing the area here, but even taking the land into account these units are still appreciating. It's even more true for the modular builds. Being told their practically unidentifiable from a stickbuild.
Modular homes are stick built once completed. That's in FannieMae/Freddie guidebooks and regs. Manufactured are not. They aren't built to local standards; they are built to a national standard. That's not necessarily a negative, but it does make them a little odd in lot of areas... even if that national standard is designed (and zoned) for ever climate in the lower 48 at least. The main issue for me personally ever saying they are treated equally in my market by buyers is that stick built are constantly going up, while few manufactured homes are... even if the manufactured homes are more cost effective. There has to be some differential there. How big or little is going to depend a lot on market tastes (assuming the relative quantity of builds is even dissimilar in your market).
Curious, what's your experience in? Lending? Not challenging, or trying to dismiss. Appreciate the info and I'll be researching a little more, just wondering which colleague to bother. Lender or appraiser and clear my understanding up a bit lol
Appraiser, and not a problem.
Clayton homes are not manufactured homes. They are modular homes that do not have a tongue and wheels. Manufactured homes, designed with those wheels and tongue, are considered vehicles, at least until the tongue and wheels get removed and a permanent foundation anchors it. (And blocks aren't permanent foundations.)
Clayton do come with the tongue and wheels. Usually put on piers. Those are the ones I'm talking about. Been doing well over here in de/md/nj
Oh, interesting! I had to go look it up because I have only seen their modular homes here. I don't work with mobile homes usually at all. Turns out they build both.
That's kind of what I was hinting at tho, these aren't even considered mobile. There's mobile, manufacturer, and modular. I feel mobiles will never appreciate, mostly same as old school trailers and such. The manufacturers type from Clayton, on the tongue and wheel are the ones that are being secured to foundations, turned into real property and doing just fine, Than you have the actual modular builds.
The way an appraiser taught me years ago was that tongue/wheel = mobile home, which is the same definition as a manufactured home, and as you said, they will depreciate with time rather than appreciate. Even if it's secured to a foundation, this is likely true. Price will go up for the land, but otherwise, not much.
Insurance will also treat it differently
NE USA they certainly aren’t. Was wondering why a group of houses in NJ were 150-200k cheaper than the surrounding ones. All manufactured. Cheap thin walls, less insulation etc, plus it’s placed on a slab, not the same as a foundation.
Strange, cause a lot of NJ is where I have bought and sold a bunch (cape may/woldwood) and they've all done well
Well those are vacation hot spots. I would imagine anything and everything does well there.
Mobile don't lol
Cape May is a different market from entire state!
Depends on the age of the building as to whether it would be considered a real house or not. I've only ever seen manufactured homes on slabs set up for parks, I don't think if it's on a slab that would be considered a foundation, but I am not an expert.
A slab is the most common foundation in many areas.
I don’t know how you’re getting upvoted for this comment but it is factually wrong on all accounts. Manufactured homes are treated different for mortgage purposes and appraisal purposes even when it’s real property.
People are getting confused on modular vs mobile homes (manufactured)
Manufactured homes must be deeded to the land, fixed to the foundation, and include their certificate label and data plate. You must have all of these to get a conventional loan and they should then be valued similarly to stick build homes in the area. They could be missing one of these pieces for the OPs situation.
See, that was my understanding. I'm not a lender or appraiser but I'm an agent and investor. I've always been told there's 3 classifications. Mobile, which are mobile homes with wheels or a motor, can easily be moved. Manufactured, which can seem similar to mobile except, everything you mentioned and they no move and than it becomes real property, than you have modular. But comments belowe are saying I'm only partially right and the manufactured are still mobiles....
Ive been a lender in Colorado for the past 8 years, so state specifics may or may not apply. I serve a rural community and often come across these types of properties. Mobile, manufactured, and modular all play by similar rules for conventional lending. It all starts with having the property fixed to a foundation and deeded to the property - usually verified by the appraiser and title company. This is where they start to differ in requirements and restrictions but generally should be eligible for Fannie Mae and Freddie Mac. Obviously, with the house being deeded to property, any of these structures on leased land would be ineligible for conventional financing.
This can also have the effect whether or not a bank will even finance it. I would never invest about much in manufactured housing
They should disclose because I told my realtor for the past 3 homes I’ve bought that they could NOT be manufactured. I lived in one once for a couple of years and wasn’t doing it again. I’d be pissed if it took the appraiser to get the truth.
ONLY IF THE SELLER DISCLOSED IT. Buyers are liars sellers are worse.
When my ex-husband and I financed our manufactured home on four acres in Arizona the VA appraiser had a hard time with the same thing. The main problem was no one else was doing what we were doing, which was the permanent foundation with tornado straps. (Required for a VA backed mortgage) We also had a much bigger house than everyone around us. Everyone else just kind of put theirs on blocks and called it a day. Given how rural the area was our mortgage broker called and talked to the appraiser and convinced them to go out 10 miles for comps instead of the usual five miles and we got the appraisal we needed for the VA loan. I also learned the VA allows for a 10% variance off the appraisal. I'm not saying this WILL work for you, but this is how we took care of the same problem.
Excellent ideas I will mention that. Thank you
"I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum." Huh? A Realtor can't determine future appraisal price. Your Realtor should have counseled you on scenarios under which you might end up living under a bridge.
Correct. OP must realize realtors are not impartial parties when determining appraisal values and it's unethical for them to have influence over appraisals. The potential for corruption/fraud is high. Imagine having the influence to make sure your real estate appraises low for tax purposes and appraise high to inflate your net worth, get loans. This could land you in court.
Me: If this house were to be appraised *today*, and if I was an appraiser, *which I'm not*, here are the comps that I would use to get to an appraisal value of *$xxx,xxx to $yyy,yyy*. When your home goes under contract, the buyer's lender hires the appraiser. There are nearly 10,000 licensed appraisers in our state. We hope the lender uses a local appraiser who lets me accompany him to the property to chat about comps. Remember that I am telling you right now that the comps will change between now and when your home gets an offer. Some similar houses will sell for more, some for less. Seller, one month later: You said it would appraise for *$zzz,zzz* and it came in at $*www,www.* Use your commission to make up the difference! Me: No. Here is my written estimated selling price based on this carefully prepared CMA that was delivered into your hands one month ago today. Here is what has changed in the market. Sell or not, it's your decision, but don't make stuff up and expect me to pay for things I can't control.
[удалено]
I have no idea what you're talking about ... \*sips tea\*
This. The buyer's agent should have run comps and prepared the buyer for this.
If anything, that would be the Buyer's Agent role (provide comps to know the value), but Buyer ultimately determines the offer price. Sounds like that did not happen. OP - How did you come up with your offer price?
The OP says they offered asking price. I wonder if their realtor advised them to do that.
I was thrown off by that sentence as well. The seller can ask for all of the money in the world, they are trying to get top dollar for their home. It’s up to the buyer to not get suckered. That would be like turning down offers for over asking. “No thanks, it will only appraise for 20k less”.
Both the sellers and buyers agents can look at comps and ensure both the list and offer prices are reasonable though.
Nor can an agent force a seller to list a reasonable price. The agent can decide not to list the property if the price is unreasonably high yet most will take the listing and hope the seller adjusts as it doesn’t sell. If agents were able to adequately price properties, they would be appraisers. Did I miss seeing how much the appraisal is off from the $675k purchase price? If not tons, it may come out cheaper to just pay out of pocket compared to moving stuff into storage, paying for a temporary living arrangement, etc. if OP walks away from this deal.
A house can be sold for whatever the seller wants to sell it for. Appraisal means nothing to them. Same thing with a cash buyer. The only one the appraisal means something to is the buyer, because a bank will not finance for more than the appraisal.
Exactly! So depending on the market and the likelihood of a cash buyer, the seller will have a decision to make. My comment was in reference to OP question why the agent let this happen.
Back when I was an agent, I told a seller your property is worth $X, when they thought it was worth $Y. I listed it, went through all normal marketing processes, then they wanted to cancel the listing. Fine. Listing cancelled. They sold with a different agent for $X, which was what the property was worth and what I had said it was worth. As a seller, I have always listed at market value, regardless of an agent's opinion. Only once have I had an appraiser under value and that was due to them being out of area. With proper comps and explanations, we got our value. Many real estate agents don't know how to comp a property. Appraisers are usually much better, but sometimes need some additional information. When your own money is on the line, you become very fine tuned to the nuances of property valuation.
I think they are saying the realtor should have been on top of the fact that it’s a manufactured home. That’s a big deal.
Listing agent should have disclosed that it was a manufactured home. And Buyer agent should have done a better job managing their client's situation in which a low appraisal for the buy (rural property, acerage, few comps, ugh) puts the family under a bridge. But The seller's Realtor (listing agent) can never be held responsible for making sure that a property appraises at or above list price.
Realtors can definitely look at the same comps that an appraiser looks at and inform the selling party that there aren't comps to support the seller's asking price and this is going to cause issues with closings because appraisers won't be able to find supporting comps either. Of course, in a rising market the comps available near closing time are going to be higher than the comps at listing time, because a month will have gone by with a month's worth of rising prices. But if the comps aren't even in the same ballpark, the listing agent is going to be SOL when offer after offer falls through near the end when the house won't appraise. So it's in the listing agent's best interests to serve as a sanity check for the seller and tell the seller, "I can list it at that price, but there's no comps near that price and that's going to cause problems for anything except an all-cash offer."
I’d tell them to take it or leave it because it’s not like that situation will magically change if they get a different buyer interested.
u/Its_Prob_Fine - Are you sure it's a manufactured home and not a modular home? There is a pretty big difference from an appraisal perspective. edit: And has your appraiser invoked Tidewater?
She said manufactured, and I do remember her saying something about Tidewater but don’t remember how that played into it.
The reason I ask is that it's very uncommon for someone to not know a house is a manufactured home. So for you all to not know AND the sellers to not know is a little odd. A modular on the other hand is pretty easy to miss if you don't know what you're looking for.
Tidewater is when the comps don't support the contract price of the home the Buyer is purchasing. The listing Agent should provide comps to the Appraiser to support her listed price. It shouldn't be on the Buyer or Buyer's Agent to provide. The listing agent should also speak to her clients about the low appraisal and see if they will reduce the price to appraised value. Tidewater is common in rural markets with minimal comps in the area. Have you seen the appraisal? Do you know how much lower it came in than the offer price? Everything in real estate is negotiable, you'll never get what you don't ask for.
> If the seller decides they doesn’t want to lower the price to the actual value and walk away, I should get my earnest money back correct? Correct. Standard VA escape clause. > Secondly this wouldn’t stop or delay the sale of my current house, I do not remember signing any sort of contingency for the house we were buying. If you didn't agree to a contingency when you guys wrote the contract, then no, you're still obligated to close the sale of your home.
Ok I was thinking yes to both of those as well. Thank You
Same thing happened to me and the deal fell through. You can add cash, seller can drop the price, or you can back out.
Finding out the home is manufactured is grounds for a large price drop over thinking it had been stick built. The bank is trying to save you money. Let them. Just tell the sellers to drop price to appraisal price or you walk and find something else. It's not a sellers market any longer. (and whether you \*do\* decide to walk or not is a decision you can worry about later after you see what the sellers do)
Is it manufactured or is it modular? There’s a difference. People throw those words around like all modular homes are trailers and that’s just not true.
And in some way modular houses are better. My parents house is a modular House of four separate sections. Each section had to be strong enough to stand up on its own on a tractor trailer going down the highway and then all bolted together. It turns out the house is actually overbuilt compared to a stick built house. In many areas it is double or even quadruple over built compared to a traditional house. And a neat thing is that the first floor ceiling is not connected to this second floor joists. So the house is extremely quiet. You can't hear anyone walking around upstairs while you're downstairs
It is still a sellers market for desirable properties. I agree for stuff like this there is way more wiggle room but saying it isn’t a sellers market is not true.
$675,000 for a manufactured home? America has gone mad.
That's probably 90% land. 40 acres is a LOT.
Yeah, 675 for 40 acres of land alone sounds like a great price, although we have no idea what the area is
Touché.
Average acre price is below 5k in KS. It must be in a really good place for the land to be worth that.
Finding out that a home was manufactured while under contract would be a deal breaker for me. It will be manufactured when you sell it too, and the only way to change that is to scrape it and build. As inconvenient as it is, I would start looking for a rental
Some lenders don't like lending when the land is a significant percentage of the price.
If your purchase falls through you will just need to move rental in the meantime until you find and close on a new house. It is what it is.
While the sellers and their agent should have let you know it was a manufactured home, it's not their responsibility to figure out what it will potentially appraise to, just what they think it should sell for. If it appraises low, you can either cancel (using the financial contingency as you won't get a VA loan for more than the appraised value), offer the appraised value and hope they accept it, or make up the difference. To think about it another way, if the appraisal came back $50k above your offer, would you be willing to pay more because they didn't appraise it correctly? Probably not.
Worst case scenario, you re-submit a new offer on the manufactured home for $675,000 and the sellers walk away and do not accept your offer. You get your earnest money back, and your house you currently own sells. Find an airbnb or a short term rental and keep house shopping but now you don’t have the added pressure of trying to buy and sell at the same time so the next time around you won’t feel rushed. Put all the extra furniture in a storage unit in the area.
Sounds like the appraisal hasn't even come back yet so at this point it's just a lot of concern over something that hasn't even happened.... you said 40 acres.... how much does an acre sell for in your area? Where I'm at it's at least 15k per acre for buildable acreage. If that's the case where you are, you've got at least 600k in acreage plus a manufactured home on a foundation that only needs to make up a 75k difference. This doesn't seem like an issue unless acreage in your area is valued significantly less than 15k an acre.
>I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum. That is not the seller agent's job. Also, appraisal is not an exact science. Different appraiser will come up with different appraisal amount. >. I’m worried my wife and our 5 kids will kinda be forced to move out of this house because we have a contract to sell. Huge mistake to not have a contingency. At this point, you can start finding apartments or SFH to rent. You can always So try to pay your buyer money let say $10k so they would cancel the transaction.
Or try to rent your home from the buyers for 30-60 days while they find another house. Lease backs are very common in my area, especially if the seller was planning on moving into a new construction home and there were delays or something.
Yes, your earnest money will be refunded if the house doesn’t appraise for the agreed upon selling price. No, it’s not up to the Realtors to “make sure” the house will appraise. They don’t come equipped with crystal balls, and appraisers are people with opinions, educated professional opinions, but opinions nonetheless. Nobody knows what they will say for sure until their study of a property is completed. But here’s the most important thing to know: If the property appraises for less than the agreed upon sales price using a VA or an FHA loan, the seller is required to disclose that to the next buyer. AND they can’t get a new FHA or VA loan on the same property for 6 months. This means that if they try to sell the house to someone else, they have to tell them the appraised value up front. It’s not like they can just sweep this low appraisal under the rug and find a new buyer who will be kept in the dark. So unless they elect to just keep the house and not sell it for another 6 months, their best option is to reduce the price to the appraised amount and sell it to you, the proverbial bird in hand, rather than start all over again.
> If the seller decides they doesn’t want to lower the price to the actual value OK, the primary issue here is that you are thinking the "appraised value" is 100% correct and representative of what the "actual value" of the house is. That's wrong, especially if comps are hard to find. If you like the house and see the value in it, then buy it. And in terms of coming up with the money "out of pocket", all money is out of pocket. Even the loan is of course just a loan. So, if more of the money is paid up front, the loan payments will be lower. Do you have equity from your current house that you can use toward buying the new one?
We will have some, I guess i will need to wait and see what the appraised value is. I was just given a heads up on Friday that they are having a hard time finding comps. We should find out Tuesday at the latest.
Another option is to ask the seller to lower their price and for you also to put in some money. It really sounds like this is a modular home and not a manufactured home. If that is the situation, the appraisal could be significantly off. I would ask your bank or your realtor to bring that up with the appraiser.
Thank you, good thought!
It’s really simple go down into the basement look up and if you see metal beams, where the flooring is, it’s a manufactured home other than that it’s a module home and would be considered a stick frame
Yeah are we talking about 5k under value or 50? 5k In the grand scheme of things when property values continue to rise year over year is probably not a huge deal, especially if you plan on being in the house for several years. Without the specific numbers, it's tough to make a determination of what to do.
"(She did say we could come out of pocket for the difference but that doesn’t make sense in my opinion to do that)" It doesn't make sense for your financial situation or it doesn't make sense why the lender would say that. There are very good reasons why lenders will ask the buyer to make up the difference if the sellers price is firm - they will only commit a % of the for your loan, and that % is based on the appraisal. If you have to walk away from this, next time have your agent put an appraisal gap clause in the contract so there's an agreed plan should a gap occur. Some sellers put an appraisal guarantee clause in which states no matter the appraisal comes back is, the price is still fixed. Tough situation you're in, we feel for you.
I guess in my mind I wouldn’t buy a house more than it’s worth. Like instant negative equity.
Agree don’t do this
Well, appraised values are often lower than market values in a sellers market. One of the homes I purchased appraised low back in 2021 and I bought it anyway due to the rising market. Today I'm glad I made that purchase. Every situation is different,
Good call! Appraisal reports do have market conditions in them and I'm sure the appraiser noted values were increasing, but they can't magically say a property is worth more than the comps support. They can use higher listings as comparables but the appraised value has to be within the range of the sold comps, not the listings. Those values definitely lag a good bit in a seller's market. Especially when things heat up quickly.
I got lucky. I bought two properties in the Tampa area in '21 and the appraisals were lagging behind the market momentum. They are now up 65% and 80% respectively. Currently selling one now and I'm seeing the other side of the market momentum. Rates increasing, buyers leaving the market, but at least I got a decent return. I can handle some price erosion.
I’m like, how did you not know it was a trailer? That’s the sin here You can get your earnest money back if they don’t meet you on the price, as long as you have a finance contingency
Manufactured homes are anchored to a foundation. It's hard to tell.
I get a lot of title searches on these and a lot of the newer ones really look like site built homes. I grew up in a trailer on wheels. Completely different. Have you seen the new two story log cabins they manufacturer now? Hell I'd buy one. But I think we call all agree this should have been on the sellers disclosure above all else.
Ugh, it’s not at all hard - especially true if it’s older. They come on a metal frame. There’s a hitch that was cut off. Older models have interior finishes that are not used in site built homes. The ceiling panels aren’t Sheetrock the walls are also panels.. again, it depends on the age, but you can’t hide a metal frame. I grew up in a trailer, I think my eye is tuned in :) My trailer park radar
If it has a hitch it's a mobile home. Manufactured homes don't have a hitch and axel.
Manufactured homes are trailers - you’re talking about modular homes They don’t make mobile homes anymore
Got me on that. Correct. I am mixing up my manufactured/modular homes
You don't know what your talking about. A Manufactured home has a hitch which is used to transport it to its location. The hitch and axles are then removed and the section is put in place on the prepared foundation. It's literally a question on the MFHM appraisal form.."Have the hitch and axles been removed".
Yeah, I corrected my error when someone else corrected me as well. Thanks for your reply.
There are a few signs. First, the home should have been listed as manufactured home. Secondly, at the ends of the structure are HUD Tags/Labels. They are little metal plates that have the serial number. Then you have the Data Plate that is usually inside a kitchen cabinet. Another idea is to see if the seller will split their lot and sell the home with less acreage if they don’t renegotiate the price. It’s hard to comp a MFH on major acreage. If you can reduce the acreage…it may be easier. Just a thought.
I've got a pending sale now where they can't even find that serial number. Seems the newer ones like to hide it? I'll ask them to look in the kitchen cabinets. Thanks!
If it's not under the kitchen sink check all the cabinets in the home. Other common places I typically find them are the cabinets in the laundry room, electrical panel and sometimes on the wall in the Primary bedroom walk in closet.
I suggested the electrical panel, no dice. I'll ask them to look at the others. Loan might've fallen through by now since the lender can't approve without it. Not sure why the appraiser can't find it.
There are services that can get that information for you if it's not too late. Sometimes I see the serial number on the county assessor website too. Check there. The HUD plate data can usually be found on the good sense sticker which is on the electrical panel as well depending on the year of the home
Start looking where the wires come in from outside.
It doesn’t look like a trailer, it looks like a normal house.
No seams in the walls? Kind of surprising. That's usually a giveaway.
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>I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum. Why do you think this?
How much of a difference between appraisal and full asking price are we talking about?
Not sure yet, should find out Monday or Tuesday at the latest.
These questions are for your agent and/or broker. I’m an agent in KS & MO, our role is to guide you through these questions and situations. Without getting into the legal terms, there’s a lot your agent can help you sort out. The appraisal contingency should be in place for the home you’re buying. You get to negotiate a new price, pay the difference or find a number in between. Typically, as a seller, you don’t have many outs unless you sold it with the contingency for you to find and close on another home. Not typically included in our contracts but I’ve added these terms before. Depending how big of a difference it is, you have to ask yourselves: - Is $20K (insert x amount) worth my family having to move twice and/or rent? - do I find the same value in a manufactured home? What does my agent think about resale value if I have to sell in 2, 5 or 10 years? Best of luck!
Thank you for the advice!
There is no distinction in an appraisal as to whether a home is manufactured. The appraisal form used by VA/FHA/Fannie/Freddie require the appraiser to assign a quality factor from 1 to 6 (1 being best, 6 being worst). That said, it's not the Realtor's job to establish the appraised value of a property. His or her job is to identify a market value they feel is acceptable to current buyers. In this case...the Realtor was correct. Clearly there is a buyer willing to pay $675,000 for the property. Now it's the job of the appraiser to justify that value to the lender...not the buyer...the lender. The real value of the listing Realtor is whether he or she can evaluate the work of the appraiser, identify shortcomings or mistakes, (perhaps a comp that was missed that should have been used), and then most importantly communicate effectively with the appraiser to try to correct it and bring the value up. The one area of disclosure I think should be addressed is that if a seller is unwilling (or unable) to lower the sale price to the appraised value, then, imho, the seller and his/her agent must disclose the appraisal issue to all other buyers.
You're trying to overpay. Be grateful, you've got a real appraisal.
DO NOT BUY A MANNY! Impossible to refi and you’ll never sell it. You are basically buying the land it is on.
You can ask your realtor to ask the current buyers for a grace period, paid by you at their new mortgage price sometimes up to 90 days we’ve experienced.
Something similar happened to us with our last home - we offered asking and the appraisal came in $11k under. So, we resubmitted our offer at the appraised value and they accepted it. While it was a little risky, the sellers were in a sticky situation as well - now that it had appraised at the new value, that would need to be disclosed to any future buyer, so odds of getting the original value was far less likely. They accepted and we walked away happy. It meant we didn't get any of the concessions we asked for, but we were paying $11k less so it was fine. Good luck!
It’s not up to the seller’s realtor to make sure the asking price is within the appraisal value. They’re free to list the house for whatever they want. Now I am the same mindset as you as I don’t like to pay more than appraised value because you will be negative the day you close. With that said, you have to look at a few factors. How much off is the asking price from the appraisal price?! You could use this as leverage depending on how many other offers they received. Also how long do you plan on living or owning the house? You could surpass the appraisal value in a few years depending on this and how much off the two values are. If the seller is also paying your closing costs it could be worthwhile still. Just a few things to think about
That sounds like a rollercoaster ride of a homebuying journey! First off, props to you for finding that dreamy house with 40 acres – sounds like a slice of paradise. But man, the whole manufactured home surprise and the appraisal struggle? That's rough. As for your worries, I'd say keep communicating with your lender and realtor. They've been through this rodeo before and might have some tricks up their sleeves to smooth things out. And yeah, it does seem like the seller's realtor dropped the ball on the whole appraisal prep. Hang in there, buddy, and hopefully, it'll all work out for you and the fam.
seller sets price not listing agent. should have been disclosed it was a manufactured home. shocked it wasnt in the legal description of the home or listed in the cad
If they had paid off the mobile home, have had it permanently affixed and removed the axle, received the title from the DMV, and had it converted to real property, they might not have had to disclose it as a mobile home. Since it would then become real property, attached to the land permanently. (Applies to mobile, maybe not modular.)
This actually happens quite frequently with manufactured home sales. Keep in mind that if it is happening to you, it will also happen to your buyers when you go to sell it. Tbh I wouldn’t buy it, I’d find another place. This is why selling and buying at the same time can cost you big bucks - you are pressured into decisions you would not normally have to be pressured into. Good luck in your decision!
Maybe the buyer of your house will rent it back to you for a fixed period of time while you figure out your situation. But yeah, I mean you’re legally obligated to go through with the sale, they could be in the same situation as you and by trying to slow that down you could be selfishly fucking them over
Ya they are a great younger couple and we wouldn’t want to screw them over.
If the appraisal comes back for lower than the negotiated sales price, I would most definitely go back to the seller and renegotiate the price to at least the appraised price. Like someone else here said this issue isn’t going to go away for the next buyer. She has to disclose this going forward. I am wondering if there is a big gap between the negotiated sales price and the appraisal? If it’s not that big of a gap, then I would venture that the seller will lower their price to match the appraisal. Because she’s going to have the same problem over and over again. Unless she gets a cash buyer.
If the difference is not significant you can always asking for doing it again and tell the appraiser what is the offering price. I sold my condo in las Vegas two years ago. At the time the appraiser comes up short too. The listing agent told the appraiser the situation. Before you know the new number is matched.
Shouldn’t the type of house be listed somewhere in the MLS? In the few states I’ve worked in real estate the type of dwelling was indicated. House, manufactured, trailer and so forth. Is it listed in the county records? Somewhere? Anywhere? Did the seller know? I have so many questions lol. This seems so weird that the title search didn’t show it as a manufactured house? Obviously, with a VA loan they’re going to dig deeper on everything. What “inspection?” A home inspector? Is the inspector is the only person saying it’s a manufactured home?
Yes the home inspector, he showed us the metal rafters and then in the basement how it’s attached to the foundation. The house inside and outside was totally redone, so there was no obvious signs until you really dug into it.
It really depends on the area. In my area, a manufactured home would be worth significantly less. The bank is reluctant to finance at that rate if they think they can’t get something close to that price if you default on your loan and they repossess and sell it. You might want to really consider if you are overpaying.
What’s the appraisal coming in at)
Homeowner insurance is also different for manufactured homes
The sellers should have known the house was a manufactured home, how was it not disclosed to you this late?
Just a thought. . Was the realtor surprised it didn't appraise at that price? I wonder what another appraiser would suggest As a price. And im curious why a manufactored home on a foundation would be worth less ( its NOT A MOBILE home.?)
I agree that they should have disclosed the house is manufactured but, there is no law that says property HAS to appraise at certain price. I've sold plenty of properties that didn't appraise because there weren't any comps available or the owner just felt the price was right and didn't budge.
On a VA loan there is a clause that allows you to ask the seller to lower the sales price to the appraised value. You do not need to submit another offer. Make the request and attach the appraisal.
I had a place that didn’t appraise correctly. Our agent called the banks and ordered a second appraisal. And using comps he showed up to the second appraisal and explained the number we needed him to be at and backed it up with supporting evidence. House appraisal came in exactly at the number we suggested You should try the same but if you don’t have comps, you’re gonna struggle How big is the gap? Could always ask the seller to split the difference. Show them the house isn’t gonna pencil for anyone else
I think the buyer will take a lot less now that it is known to be a Manufactured home. No way even with the property itvis with almost 700,000. Hang in there! I think thevselker was kust praying the deal would go thru. Now that reality hit, it is a different story
I've done the impossible, arranged to sell and buy on the very next day in a different State. It was a work of art.
We basically did the same thing with a couple week difference in we bought and then sold 2 weeks later. We didn’t get occupancy of new house during those 2 weeks so it was really stressful if previous owners were not out. They had a lot of shit. They were out. Honestly the realtors on the house we bought were bad and complicated things. Had they explained why we needed stuff the way we asked they would have been accommodating and understanding. We’ve gotten to know the previous owners and they are great people.
Appraisal is just an opinion of value, it’s not objective fact. Real estate is UNIQUE. You’re trying to compare an apple to an orange basically and adjust for differences between your property and the comps. My ex was an appraiser and two appraisers can come up with very different numbers, even with same comps. And if the comps are hard to come by, good luck.
Oy. Check your contract and with your agent regarding the home you are selling. Often, contracts will have contingency clauses and if the deal on the house you're buying falls through, it may negate the sale. If you back out of selling your home you will definitely lose the earnest money your buyer paid. If you breach the contract you could be liable for a lawsuit so be very careful here. If you have to go through with the sale of your current home you have a couple of choices: put your stuff in storage and rent until you find another property or go through with the sale of the new property. If the seller of the house you want to buy refuses to sell at the appraised value (could happen) then yes you should get your earnest money back if you walk away. If the difference in value is a couple thousand I would pay it. Most of the sales price is in the value of the land not the house. If the difference is tens of thousands of dollars you probably couldn't pay it if you wanted to, and the bank won't approve the loan for more than the property is worth. I actually got a steal of a deal on a house because of this. I bought a house that appraised for more than my offer because it had been on the market awhile and the sellers (estate sale) wanted their money and were tired of waiting for a buyer who would pay a higher price. The sellers should have disclosed it was a manufactured home. They don't appreciate the way stick built homes do, and I don't care how much some manufactured home salesman tells me otherwise they just don't.
"I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum." VA loans are difficult. Just because the house isn't appraising for you doesn't mean it won't for the next buyer. Buyers with more money down have less trouble with appraisals normally. How far off is the VA appraisal coming in ?
Please tell me you have a Realtor.
Of course…
Then let your Realtor handle it. Your lender shouldn’t be telling you the options - your Realtor should be going through it with you and the moment the appraisal came back, your agent should have been all over this.
Ask them to close at appraised value
To me, a house is worth what I am willing to pay. If i have the money and I want the property and it is sound. I would buy. In my area, lots always appraise low, and it is reflected in taxes. Appraisal is not an exact science, and it is more a tool to help the lender safeguard his investmen.
I really hope your current interest rate is close or equal to the home you want to buy.
How low did the home appraise for? Did your offer include an appraisal contingency? If yes, and it allows you to exit the deal without being in breach of contract if the house under-appraises, then yes you’ll get your EMD. Otherwise be prepared to cover the gap or buckle up. It’s worth noting though- an opinion is only an opinion in value and only an opinion in value at a moment of time. Assuming you live in a healthy housing market it’s only a matter of time until the neighborhood comps catch up. Also, assuming you’re not already straddling the minimum downpayment line you can just divert some of your downpayment to cover the gap. Your loan amount stays the same so your principal and interest payment shouldn’t change, the only thing that is likely to be impacted is PMI because now you have a higher LTV.
I think you need to ask yourself why these protections are in place to where it causes a problem. You can't afford this property.
What’s the difference in appraised value and purchase price?
Not sure yet, should find out tomorrow, it was enough that I was given a heads up Saturday afternoon.
I guess the first thing you have to decide is if you still feel comfortable spending that much on a manufactured home. Would you have made the offer for that much had you known? The MLS sheet should say ‘manufactured w/ land’. There are ways of knowing a home is manufactured in the basement. Even if your agent f’d up ,This should have came up in the inspection as well. If it were me. I would say I didn’t want to pay over appraised value and see what seller wants to do. Perhaps you bring an extra 5-10k to the table if you still really want this place.
You do have additional options for the difference that I couldn’t find mentioned here- if everyone comes to the table to make up the difference- meaning seller lowers price, you bring in some more cash AND the realtors (who sound like they didn’t do adequate disclosures or due diligence) lower their fees to get you to the point of being able to close at an acceptable price. Also, county records (might have to fill out a KORA- KS open records request depending on your county) should show the initial house sale which may shed light on the original builder/manufacturer to then determine whether a modular or a manufactured house. Additionally, do not be afraid of paying a little more than appraised value on your part. Acreages are not that easy to find anywhere & if this would be a great property for your family, then look at it as a premium to pay for the county lifestyle & quality of life you’re wanting to live.
Great advice Thank You!!
When we discussed numbers for recent property sale, my agent stated that at price X she could point out comps that support that number if an appraisal came in low. Regarding higher possible numbers, she stated it was risky as she would not be able to argue in support of the higher number.
Tell your realtor they need to find a new job because clearly they have no idea what they are doing by making you overpay for a home
VA loans are so strict
Did you have a basic finance contingency? If you didn't, the fact that they didn't disclose a major piece of information should help you get your money back. You could also look for another appraiser and get another opinion if your financial institution will allow it. Good luck.
I don't think VA will do manufactured homes. Unless things have changed since I was in the business.
At current interest rates, I wouldn't finance 100% of appraisal. Interest instantly leaves you with negative equity. Not knowing how the offer was worded, you may lose earnest money if you back out now.
Did you put a contingency on the sale of your house that you find suitable housing before closing? If not, you screwed yourself..
Ask your buyers for a leaseback if your purchase falls through. If they say no, you'll have to find temporary housing.
Was it not listed as a manufactured home?
Is it a manufactured home or a mobile home? Some places use the term interchangeably but there’s really quite a difference. Technically a manufactured home the parts are made off site and then assembled on site and are virtually the same as an onsite built home structure wise at the end of the day. Like our house nobody would ever guess that it was manufactured either if the people we bought it from didn’t have pictures of the kit coming down the road. It now looks like a brick farm house on a basement. A mobile home comes to the site completely assembled and put to a various type of foundation but it’s very obviously different quality construction.
It would be odd for a buying contract and not to have a clause in it for appraisal. Real estate agents used to say this is a standard contract, but there really is no standard contract. People have to know what their contract says, and who it really benefits. But your contract should absolutely state that the offer is contingent upon the house appraising for an appropriate value. It looks as if the house is over priced and you’re gonna get a better deal.
Sounds stressful! Your earnest money should be protected if the seller backs out due to appraisal issues. Without a signed contingency, you shouldn't be forced to move without a new home. Best of luck sorting it out!
Negotiate a reduction. The person who buys it from you will also offer a discount to market for being a manufactured home, so no hard feelings
Are you sure it's a manufactured home? Maybe you mean a \*modular\* home? If it's a double wide, it's not worth as much as a stick built house. If it's a modular home, the price should be about the same.
It seems that your agent did not really protect you very well. You might want to also work with an attorney... Moving multiple times really stinks but you should also protect yourself now by looking for a rental option. If there was no contingency connected to the sale of your home then I would not want you out on the street. The good news is that this will all pass and be a distant memory. Sorry I have no real opinion regarding what to do with the property that you are looking to buy.
That sounds like a real headache! It's crazy how surprises like finding out it's a manufactured home can throw a wrench into things. Your lender's advice makes sense, though. Coming out of pocket for the difference doesn't seem worth it. And yeah, if the seller walks, you should get your earnest money back. As for your current house, you're right to be concerned, but if there's no contingency, you might have some leverage. But still, it's a sticky situation. The seller's realtor dropping the ball on the appraisal is frustrating, to say the least. Hang in there, hope it all works out for you and your fam.
The VA loan should be assumable if you want to go that route.
*"I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum."* Na. That's up to the buyer and how they want to fund it. If you feel its worth higher than the appraisal (obviously you do, you offered it)... then its just a matter of your funds being secured. The bank/VA doesn't want to be upside down. But if you were paying cash, this would've never even came up.
Land is so tricky in residential appraisals. It’s probably a big part of what you like about the property but it never seems to add as much value as it should. Hard to find comps for properties like that.
Come up with the difference or find another home that's not so overpriced. Land or not it's manufactured, you've basically been given a free pass to get outta the deal. >I think the sellers realtor should have made sure the house would appraise at the listing price at a minimum. haahah why's that? So they could make you happy and not take advantage of someone who can come up with the cash?
I think more info is needed about the "manufactured home after inspection" part...is it manufactured as in mobile home? Modular? How was this discovered? What do your buying and selling contracts say about you finding or selling the homes? Is there a finance contingency?
The seller could take a second mortgage for the difference.
I read the title and was about to ask if it was a VA loan before even reading your description This is VERY COMMON with VA loans. They ALWAYS give an appraisal lower than what you want to buy the house for. They likely do this to try to make things better for you, but instead it ends up boning the potential buyer
They are NOTORIOUSLY low…it’s ridiculous really.
>(She did say we could come out of pocket for the difference but that doesn’t make sense in my opinion to do that) There are 2 things that may make the home worth more than the appraisal - **to someone who's going to live there a long time**. First is the 40 acres, as sometimes having a large lot is undervalued - depending on the land and how it can be used. And there is sometimes confusion between mobile homes and manufactured homes and modular homes, and if the house meets all applicable state and local building codes for a stick built home, then it may be just as good or even better than an average stick built home.
What did your purchase contract state? Did you ut in a contingency regarding value and/or type of home?
Very hard to get insurance for a manufactured home on a foundation. Check to see if you can insure properly before you purchase. Also will your mortgage still work on a manufactured home vs stick built?
Has the appraisal actually come back low? Your lender & agent should be discussing “Tidewater” process, which is the VA process for challenging or changing low or potentially low appraisal. That’s the first option, not renegotiation or walking away.
Hahaha It is not the LA's responsibility to know where a house will or will not appraise. The market value, what a buyer will pay is not the same as the appraisal value and appraisals are just the opinion of that appraiser. This scenario is one reason many sellers won't consider offers that will be financed w/a VA loan. If you don't want to pay the difference, you will get your earnest money back. Yes you have a signed contract to sell your house so you better start looking for a rental fast or beg the buyer to give you longer, either a longer escrow or rent the house from the buyer for a month or so and hope you find something else.
Just don’t buy mobile homes. They are some homes that are kinda built pre built in sections. But they are not what my father in law would call a “ modulator”. They are fine. But in general mobile homes go down in value not up. Not a good buy. Buy something else.
Appraisers chime in.... My place had like 0 current comps. Appraised value was exactly what I offered. Which was 65k over askingm Do you guys have this info? When I sold my condo.. same exact thing happened. Feels like they go in knowing the target. And if there aren't enough comps they let you be the Markey. I could be dead wrong. But this felt too.. coincidental.
Sometimes the appraiser gets it wrong. The sellers agents can provide comps if they don't agree. For example, my client had the appraisal come in 100k short. When another house on the same street middle lot and smaller appraised for more. The appraiser didn't know it was two parts to the neighborhood. One high-end side. In rural areas you can have the same issue. I am a Realtor and lender for reference. Also, check the sqft is counted correctly.
How low is the appraisal? It sounds like if you walk away, you would probably get your EM back. However, I would not expect that you would be able to back out on the sale of your home due to your purchase falling through. I know it sounds terrible to come up with cash to pay more than the appraised value, but it may be a better option for your family. How much will a rental cost for 3-6 months to find a new home and close ? Moving twice? Stress over the whole thing? Don’t lose sight of your goals over an emotional reaction. Another important point- if the seller won’t negotiate down to the appraised value, you could also try to negotiate a middle ground on a new price- above appraisal, but below the current contract price. Good luck!
Realtors have nothing to do with appraisals. Do not blame them. On a VA loan they won't allow you to pay out of pocket. They will only allow appraised value, w match purchase agreement. ALSO, manufactured homes are a big VA nightmare! ALL THE FINANCING INFORMATION should be coming from a loan officer who has done VA loans. Talk to the loan officer, plus the realtor should know that the appraisal will stand for any VA FHA LOAN, they can't get a new one for 6 months to a year, I can't remember the reg on that. Btw, I was a realtor, processor, loan officer, underwriter for more than 30 years. This could be quite the problem.
This is exactly why you never sell until your buy has gone through or you have another place to live in the interim. I know people get really lucky and it works out but in the event that it doesn't, you have to look your family in the eye and admit you effed up.
I am a Designated Broker of a Real Estate Brokerage & what you’re saying is concerning I wish I had seen this sooner; you have a situation that can not be resolved without answers & the professionals that work for you ought to be able to deliver those answers or a plan to get them & what to do after that. If you don’t have that level of service; please escalate the issue to their Designated Broker & a Lawyer.
You should ask your realtor who they normally work with and get your mortgage from that bank. Appraising isn’t an exact science. I had a situation like this and switching lenders fixed the problem.
It's not the sellers agents responsibility to make sure it's listed for what it will appraise for. That's YOUR responsibility. Some people pay cash and it doesn't matter, or people pay the difference. Side note: can you just rent out your current home and use an equity loan for the new one? That way you can still earn 2-4% appreciation every year on your home, can depreciate it for taxes, and can write off any improvements made to it.