This really shouldn’t be a surprise to anyone – Everyone loves cash! It’s one of those words that is almost always good, regardless of how it is used, like “firm”, “svelte”, “fit”, “athletic”, etc. As a real estate broker I particularly love cash because of how much simpler, faster, and more predictable cash transactions always are. As Donald Trump famously said during a New York City real estate downturn several years ago, “Cash is king!”.
I am smack dab in the middle of THE most frustrating financed transaction I have EVER seen after 20 years in the real estate industry. The lender, who shall remain nameless, is a national firm with a good reputation. The buyer is super strong financially, with a great credit score, and could by liquidating assets, pay cash for the amazing $550,000 residential home we have listed in Sevierville if he wanted to.
The house we have listed appraised for over $570,000 over two years ago when the local real estate market wasn’t as strong as it is now. We priced it to sell at $550,000 and got a good offer that we were able to negotiate to very close to the asking price. The buyers provided us with the proof that they were pre-qualified and we all assumed that we would have a quick and painless closing. You know what they say about what happens when you assume…
The young appraiser came out and appraised this spectacular house, at first unaware that both lots and the barn were to be included in his appraisal. He said that he didn’t anticipate any problem and we waited for his report. When it came in, the value he assigned was for only $500,000 and that made no sense to me. Looking closer at the report, it was clear to me that he had undervalued the property significantly. The comps he used were not built as well nor did they have as much above ground heated and cooled living area but for some unknown reason he assigned a lower price per foot to my listing than the comps had sold for. Made no sense whatsoever so I wrote a letter to the lender contesting the appraisal value.
Meanwhile, our buyers still want the home as they have looked at property for almost a year and they know what else is out there and the quality difference that this home offers. Amazingly, when the sellers refused to drop the price, the buyers offered to pay the full contract price, coming up with the additional downpayment that would be required, as the lender will only loan 80% of the appraisal price. The sellers began the large task of moving out of a spacious and well furnished residence and I wiped a large bead of sweat off my face, again assuming that we could now quickly close.
Back at the bank, someone who read my letter decided that the appraisal was indeed flawed, agreeing with me that there appeared to be some errors. Incredibly, the bank wasn’t willing to just proceed with the low appraisal and allow the willing buyers to pony up the additional downpayment, but instead demanded a second appraisal, temporarily derailing the sale again.
The second appraiser came out promptly on Friday afternoon, and promised that his second opinion appraisal would be delivered to the bank on Monday. On Monday, the appraiser said that he was still working on his report and it would be Tuesday. On Tuesday the appraiser said that he would have the report done by the end of business that day but much to my dismay it didn’t arrive. Late on Wednesday afternoon the report finally arrives but it is now under review by the lender. All the while, we all continue to wait for the lender. The sale that was supposed to close on the 23rd, and then was extended to the 30th is still not sure to close. Now I can’t even get an answer as to the status of the loan.
This is why I really do love cash transactions! Every day that goes by costs my clients money. My sellers are incredibly patient people but this can’t go on forever…