Reality Check on Mortgage Broker Behavior?

Question

Quick background: I'm selling one of my SFRs, buyers are using a mortgage broker to get a USDA loan, which I believe is a 0% down. No RE agents involved. We agreed on the sale price, and 6% seller concessions.

Now we're about 2 weeks out from the originally scheduled closing date, and the mortgage broker sent me an email saying the appraisal just came in, and we're going to have to lower the sale price by 6% (and still do 6% seller concessions) in order to proceed.

I asked for a copy of the appraisal, and he said no. When I pressed him on it, he told me "The appraisal is good, they did 6 comps, and I know this appraiser - they are good." I'm still not buying it, and I know of at least a couple of sales in the area that had extenuating circumstances that lowered their sale prices 20-30%.

He is also refusing to send a copy of the appraisal to the buyers (who I have a very good relationship with) until after he receives a signed addendum, updating the sale price.

Does this make anyone else's Spidey Sense tingle?

Due to a lot of other information I don't need to go into, I'm pretty much locked in on this sale - I'm just wondering if I'm getting played here, or if this is typical.

Even if we do the addendum to lower the sale price, I'll eventually get my hands on a copy of the appraisal, so the broker can't be banking on me being an idiot...right?

Rob Golob · Answer

Could you not amend your offer "contingent on receipt of said appraisal stating $xxx appraised value?"

Chris Mason · Answer

Hi Jason,

It's not unusual to refuse to give the appraisal to the seller without the buyer's permission. The buyer paid for it. However, generally when an appraisal comes in low it's prudent to share it with the other side of the transaction to justify any price reduction (when an appraisal comes in high, by contrast, you NEVER share it with the seller or listing agent!). It's incredibly unusual not to share the appraisal with the buyer, however. We're actually legally required to share it with the buyer that paid for it in a timely manner.

Michael Noto · Answer

Get your buyer to send you a copy of the appraisal.  He must have it, no?  He paid for it most likely so he is entitled to a copy  I would think.

Tony Nguyen · Answer

Sounds a little odd to me. Although the lender cannot directly influence the appraisal price by explicitly expressing exact pricing needed to the appraiser. The lender could talk to appraiser to figure out how he came to the conclusion of value and figure out whether or not those "comps" he pulled really do justify the valuation because depending on which approach the appraiser used, the valuation could be skewed. The appraiser could have pulled just 6 similar comps in a 2 mile radius as opposed to a wider scope of lets say 5-6 miles to determine value. The lender has multiple ways they can help with an appraisal coming in low to fix your issue but that also comes down to whether or not the lender knows how. Hope this helps.

Ellen McKinley · Answer

Okay, it's 2 years later....after reading all the comments, I was disappointed that @Jason V. didn't come back and say how it all turned out! If you read this, please do.

Joe Kim · Answer

@Jason V. Definitely fishy considering this from the CFPB website "The Bureau of Consumer Financial Protection (Bureau) is amending Regulation B, which implements the Equal Credit Opportunity Act (ECOA), and the Bureau's official interpretations of the regulation, which interpret and clarify the requirements of Regulation B. The final rule revises Regulation B to implement an ECOA amendment concerning appraisals and other valuations that was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). In general, the revisions to Regulation B require creditors to provide to applicants free copies of all appraisals and other written valuations developed in connection with an application for a loan to be secured by a first lien on a dwelling, and require creditors to notify applicants in writing that copies of appraisals will be provided to them promptly."   You gotta give them an appraisal, plus I don't know about USDA but in the conventional world I cannot "know the appraiser".  That's one of the things that was heavily regulated.

Harjeet Bhatti · Answer

Buyer has all the right to get an  appraisal report. Ask your buyer to contact his loan processor and get the copy of appraisal report.

Jason V. · Answer

It's a long story - the buyers are my tenants, who moved in a bunch of years ago wanting to buy the place. They're really nice people, but not super financially savvy. I sent them to the loan officer at the local bank I work with for investing, but they didn't have a good product for them, so I sent them to a broker I knew did USDA loans, and presto. So in a roundabout way, I'm the instigator of the whole deal.

It's NY, so there are lawyers involved on all sides of the deal, but the broker came directly to me, and all 3 lawyers had no idea what was happening.

I guess we'll see how it goes - thanks for the input bud.

Chris Mason · Answer

Yeah, it's weird. Usually there are agents, or at least a lawyer in the middle, and lenders rarely interact with sellers except inasmuch as "hey buyer's agent, what do you want me to tell the seller?" leads to such conversations. That might be why he's off his game.

Reality Check on Mortgage Broker Behavior?

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