Home price: $1.71 million.
Loan: $1.368 million.
Rate: 3.875 percent.
Loan type: 30-year fixed with no points or lender fees.
Backstory: Crosby’s clients had been searching for a home for over a year. The perfect home came on the market at a listing price of $1.325 million. Their Realtor, Karen Starr of the Grubb Co., advised that the home had multiple offers and would sell above the listing price. Crosby and Starr collaborated to help the clients prepare the strongest possible offer.
The buyers would eventually use funds from the sale of their current home, but not for the new transaction. Their down payment funds could only allow a 20 percent down payment at the likely price. If the home did not appraise, the buyers would need to make up the difference between the purchase price and the loan amount.
Crosby’s employer, RPM Mortgage, offers a bridge loan and Crosby obtained a commitment from RPM for $200,000.
This meant that they could write an offer with no appraisal contingency. The clients offered $1.71 million, which was accepted.
When a buyer obtains a loan for more than $1 million, two appraisals are routinely needed to provide validation of the value. The appraisals are independent, and the lower reported value is used for underwriting. All parties wondered whether the home would appraise for almost $400,000 over the list price. Luckily, they knew that they had bridge financing in case this happened. RPM uses fully licensed, experienced local appraisers.
The appraisals occurred within the 15-day contingency period and both reports validated the purchase price. The loan was underwritten and approved in 15 days.
Have questions about the appraisal process? Contact the appraisers at www.scappraisals.com
Green Real Estate Appraiser 