If you’ve ever been broken up with by someone you love, you know the heartache afterward can last a long time; sometimes, it even long after you think you’re healed.
A bad FHA appraisal is kind of like that. Now, when I saw “bad”, I don’t mean the appraiser was abusive, or cheated on you, or anything like that.
What I mean is he didn’t think your duplex was worth what you and the buyer thought it was.
Let’s say, for example, you agreed to sell it for $225,000, but the appraiser said it was only worth $200,000. And the buyer, who intended to live in your duplex, doesn’t want to part with her cash
So the bank won’t lend the buyer any more than $200,000, less whatever down payment she needs for the loan.
This leaves duplex buyers with three options: coming up with the difference out of their own pockets, asking you for a price reduction to match the value determined by the appraiser, or walking away altogether.
Now, in my experience, most buyers aren’t willing to pay more than the place is worth.
So what if you truly believe your duplex is worth what you’re asking for it and refuse to alter your price?
Odds are, the buyer is going to fall out of love and break up with your duplex; leaving you to find another buyer.
Perhaps you’re thinking, “Well, I can do better anyway.”
And, well, maybe you can.
But here’s the deal. Even if Prince Buyer rides up two months later on his perfect white horse and says he loves your duplex so much he’s willing to pay you twice what you’re asking (provided he can get an FHA loan for it, of course), the bank won’t let him.
Because sooner or later, his lender is going to find out about your broken hearted bad appraisal.
FHA appraisals stick with a duplex for six months, regardless of who buys the property. So, the minute the new buyer goes to his bank for the money, his banker will refuse to give him a loan.
It’s a dead giveaway. Kind of like crying over your ex on a first date.
And unfortunately, the only way to fix either a bad FHA duplex appraisal or a broken heart is time.