Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in the
lovely greater Greenville area of South
Carolina I'm your host Stan McCune as
always realtor and real estate investor
right here in Greenville Spartanburg
Pickins all of these areas in the
upstate of South Carolina and as always
you can find all of my contact
information in the show notes if you
need to reach me for any reason and you
don't have my contact information that's
where you find it just look in the show
notes and I mentioned to you guys a lot
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short kind little review and I would
appreciate it so we've already kicked
off the year
2022 or as I joked in some of the
previous podcasts that we we don't want
to say
2022 we want to say the year of Our
Lord 2022 just to avoid confusion with
the year 2020 that might not be a
funny joke but you can listen to
previous podcast to understand what I
was saying with that but the last
three episodes I recorded all at the
same time all before the holiday season
and so I actually want to roll back the
clock a little bit because I had some
crazy stuff that happened right after I
recorded those shows that that
basically put a little bow on the
year 2021 for me and for those of you
that listen to the show you know that
2021 was quite the year for me I mean
it was chaotic a ton of curb thrown at
me in a ton of different ways and you
know of course there is an element of
just the fact that I had done more
business in 21 than in any other year
and and it wasn't even close I did a lot
more business in
2021 than in any previous year and so
there's going to be just naturally more
curveballs thrown at you and just a more
a higher variety of things that happen
but the things that I had happened to me
in
in the year 2021 were things that
other Realtors would hear me talk about
and were just blown away realtors that
had been in the business for 15 or 20
years that they had just never heard
of these types of things happening and
there were things that could not have
been avoided they were just just
difficult things that we just had to had
to plow through that I just randomly
happened to have them all in one year
and
on the positive side of it I learned
a whole lot from it I have a lot of
interesting experience that a lot of
other more experienced Realtors don't
have because I've been through and had
to navigate all sorts of really weird
things but I let's just be honest I
would prefer if I didn't have to
navigate a lot of weird things but you
know what you don't get to choose that
kind of stuff it was just the way my
year ended up playing out and of course
I had to end 2021 with a bang it would
it had you know it had been interesting
the whole year I had a few closings in
December and I had one that was going to
be basically right before New Year's
Day and that's not uncommon usually
every year I have one that excuse me
ends up coming in right before New
Year's Day so that part of it didn't
surprise me nothing was unusual about
that but in this case I saw kind of not
disaster but I saw something looming and
that was specifically with the appraisal
this was an example of a property that I
had listed for a client where we had
multiple offers for it and I told him
listen what we got under contract for I
was like it's not going to appraise for
this I'm I'm looking at all the comps in
this area and there's no way an appra is
going to give it the full contract price
so I had already greased those Wheels
with my client well then the appraisal
took a really long time and the lender
ended up telling me that the appraiser
just kind of probably didn't pay
attention to his deadline and in the end
just ended up getting the appraisal in
you know like a week late well okay it
is what it is we've if you've listened
to the show you've heard that we have
had I have had a lot of terrible
experiences with appraisers is one of
the most unprofessional groups that I
have dealt with just in general of
course not you know appraisers are
independent contractors more or less
I guess some of them perhaps can be
employees of companies but a lot of them
they just own their own company that
they work for and then they're
contracted out by an appraisal
management company that is hired by the
lender long story story short I've
had a lot of issues with appraisers and
it was no surprise that this appraisal
came in late and of course it came in
low as well well the the good thing is
I'd already gotten a plan with my client
you know in place we were not blindsided
by that I told my client right at the
beginning this appraisal is going to be
low let's see what we can let's see what
I can negotiate and and I was able to
negotiate a kind of a splitting the
difference type of arrangement with the
buyer where they were able to go up
basically a reduction from the price
we were under contract for but they were
still willing to meet halfway and then
they had to bring extra money to closing
doesn't always happen that way a lot
of buyers don't have that extra money to
bring to closing but in this case they
did and my client really want out
because the other offers that we had
been entertaining when we were in
multiple offer situ in that multiple
offer situation right at the beginning
those offers were not even as high as
we ended up selling it for
after after we split the difference
from the contract price and the
appraise value so he ended up doing
really well with that overall despite
the fact that we had a low
appraisal but that wasn't the worst of
it okay so this was an FHA appraisal FHA
Loans are generally designed for
first-time home buyers typically people
that don't have a lot of money to bring
to closing people that perhaps don't
have the highest credit scores and one
particular Quirk about FHA appraisals
just in general is that they look a lot
more closely at the condition of the
property than conventional loan
appraisals for instance and I've run
into over the years and I know a lot of
others that have run into issues with
FHA appraisers nitpicking things on the
outside of a house the exterior aspects
of a house and a very common thing is
we run into issues with wood rot that
they want wood rot to be addressed
chip paint that's another one I I don't
really know why I'm guessing it has it
probably goes back to like the issue of
lead paint I don't know but just
nitpicky stuff FHA appraisals will
typically say that a seller has to
remedy some of these nitpicky things and
then the FHA appraiser has to go back
out and confirm that those things have
been completed before they issue a final
appraisal and and here's the other
thing is that yes FHA has these
guidelines for what they are wanting the
appraiser to look at but it's still very
much up to the discretion of the
appraiser just as we've talked about in
previous podcast where I've had
appraisals two appraisals on the same
property that have come in $50,000
different
same thing when it comes to the
condition of the property you might have
one appraiser that just rubber stamps it
and another that nitpicks the property
into Oblivion just finding anything and
everything that needs to be done to it
well which type of appraiser do you
think that I got for this listing of
mine which between the rubber stamp type
and the type to nitpick everything into
Oblivion which one do you think I got to
end the year it had to be the nitpicker
appraiser it had to be that was just it
was Destiny I didn't have a choice
I'd never heard of this appraiser before
when when his name popped up on my phone
but my
gracious he said that the entire
exterior of the house all the siding
fascia Sait needed to be scraped sanded
and
painted there was a plywood piece of
sheathing that was being used as a
makeshift ramp to go to an out building
just like one of those little sheds that
people will stick in their backyard
that that plywood board was not
necessary but it was just used for
convenience as a ramp to bring you know
lawn mower in and out of the of the out
building he said that that plywood board
was deteriorated and needed to be
replaced
he said that the crawl space door had
rot on it and needed to be replaced
and and I mentioned that wood rot is
usually an issue I have never seen about
a crawl space door needing to to be
addressed in that way there were
there was a privacy fence and there were
some po you know some some broken slats
in the privacy fence some some different
things you know that had just gotten
deteriorated he said that those things
needed to be repaired or replaced I mean
we're talking about thousands of dollars
worth of work these are things that
weren't even flagged by the inspector
thousands of dollars worth of work that
he's saying needs to be done in order
for him to sign off on the appraisal and
of course because the appraiser was not
doing a very good job to begin with the
appraisal came in literally December
22nd one week before closing as we're
about to enter the holiday season thank
you Mr Appraiser for
completely derailing a transaction like
I was I was stunned I talked to other
appraisers they were stunned by this I
talked to other realtor I mean again
like I said I I have found a way to
just get these people involved in my
transactions even though I don't have
any choice over it I did not choose the
lender that that chose the AMC that
chose this this appraiser that worked
with this appraiser it was just the
whole thing was just ridiculous but it
was the hand we were dealt and
unfortunately once that appraisal is out
there that can't be changed there are
some rare situations where you can have
perhaps an an appraisal just thrown
out but that's very very rare most
lenders can't do that and if we had done
that
we still would have been delayed in our
transaction and this is where things
really got crazy this is this is the
part that I you know I've dealt with all
these crazy appraisal issues but the
phone call I got next was the phone call
that that completely turned this whole
transaction sideways and on its head and
underwater and all whatever analogy you
can think
of the buyer AG agent called me and
indicated that the
lender was not going to be able to close
a transaction if it dragged on past
the first of the year that the lender
that there was something with the lender
that that they were going to have to
change lenders and he good news he had
someone you know great that was lined up
for it and you know we would just be
sidetracked by a few weeks well the
buyer agent it it was really hard to to
really understand to get the information
from him about what exactly was happen
so happening in the in this situation so
I immediately got off the phone with him
and I just called the loan officer and I
had spoken to the loan officer early in
the
transaction
and and the lender described to me
something that just blew me away and not
in a good way he let me know that his
company they were going through some
sort of a corporate restructure or
something like that and that in essence
he was closing down his business at the
end of 2021 and reopening a completely
different loan officer lending business
in 2022 so that if we didn't close this
one by December 30th and I'll remind you
it had to be December 30th because
December 31st the banks all shut down
because that was when we observed
January 1st so we had another another
day left because New Year's Day fell on
a weekend so they were observing New
Year's Day on December 31st instead of
the normal day which is January 1st
and so if this transaction dragged on
past December 30th which is 8 days from
the time we got this appraisal he
would not be able to do the loan at all
and the entire transaction would be in a
state of flux and he was saying you know
yeah at that point I would be passing
the entire loan package off to a
different lender and you know they would
have to work with the appraisal and all
this different stuff and I and I'm just
here and my mind is just spinning
because I'm hearing all these different
things and all these problems are going
through through my head I
mean the lender insisted that this would
be a simple thing that would happen it
would just delay the trans action by 2
or 3 weeks but I was like this sounds
like there are a lot of things that
could go wrong I mean I've never dealt
with with one lender handing a
transaction off to another lender maybe
it's simpler than I think but given that
a
single loan and a single transaction
itself has so many complexities to it
then for for another lender altogether
to then take take a a loan that has
already basically been underwritten by
another bank and then for them to take
that on and have their underwriting
process be done to it it just it
sounded like a disastrous situation to
be completely honest and so we had
eight days from the time we got this
appraisal in until we could get
everything done and you know a lot of
people don't realize if you've had a
smooth real estate transaction that's
been you know purchased with financing
you don't realize all that happens in
the last week there's a lot that happens
behind the scenes in the last week
and there's particularly if an appraisal
comes in late you know the appraisal
the appraiser submits his or her
appraisal to to their company the
appraisal management company that
company reviews it then they pass it to
the lender the lender has to review it
in their underwriting and then they can
approve it and then we're good to go
there then you also have the lender they
have these federal government rules that
they have to have the final closing the
preliminary not the final the
preliminary closing disclosure to the
buyer at least three business days prior
to
closing and then they have to have a
closing disclosure to the buyer at some
point prior to closing so there's a lot
of different things oh and and that's
something that you know those closing
disclosures they have to be signed off
by well particularly the final one
but but there's the lender involved
the closing attorney involved the you
know on the lender side there are all
sorts of different parties on the
closing attorney side there are multiple
parties so there's a lot of people that
need to lay eyes on a lot of different
things and when you get one little
monkey wrench at the end of the
transaction it throws the whole thing
off now thankfully you don't technically
need a a clear appraisal you know a
completely finished appraisal in order
to be able to issue a closing
disclosure however going into the
holidays there is a separate issue of
okay we need to rush this can we rush it
with the underwriters that's something
I've run into in the past where
Underwriters are so backlogged and
lenders can you know try to push those
Underwriters
to elevate a certain file and to focus
on a certain file but at the end of the
day they're at arms length as well and
so it it ends up there are a lot of
things that could go wrong in this
transaction it seemed like everything
was was going wrong and and I've
not even metion mentioned in all of
these things that I was just saying that
could go wrong we have thousands of
dollars of of painting and scraping and
sanding and different repair work that
needs to be done over at this house as
well and that all has to be done in a
short period of
time and we have Christmas coming up
yeah
so the buyer's agent bless his heart he
was pretty aloof this whole time
he really nice guy
but without talking trash about another
real estate professional I don't I'm not
really convinced that he knew at all
what was what was going on he called
me on the the let's see here the 23rd so
the next day he called me and he was
just like you know hey my client's
wife is a sorry my client's husband
is a cont
trctor they are just going to do all
the work all the work that needs to be
done to this house they're going to do
it all they're going to be out there
with their crew on on December 24th
and they're going to get it all done I
was like okay hold on first off I have
to run this by my seller right like
you can't just show up at someone's
house and start doing work on their
house you know it was like that was
something that needed to be approved and
that's another thing another twist that
I haven't had in a transaction before is
a buyer doing work on a house prior to
buying it like that could have gone
South very quickly what if they do a
bunch of work on the house and then the
loan package falls through and they
don't end up being able to buy the house
like there's a lot of what if the seller
is not happy with the work or the buyer
does shotty work and now the contract
falls through and we've got you know
a big mess on our hands with trying to
get this house
sold so I'm thinking about all of that
but then also the next day is
Christmas Eve like they're going to get
a crew out there on Christmas Eve I felt
bad for my client I felt bad for them
and and so as well they're just going to
get all of this done I mean it was a
huge list a huge list of of everything
so I I called multiple people to make
sure you know hey what are the legal
ramifications here like what how much
are risk are we exposing ourselves to
if if we you know if my client and and
the the buyers agreed to this
really it was just kind of you know the
the same type of liability that I that I
just discussed it it was yeah there
there is going to be that risk and so
you know at the end of the day it ended
up coming down to what my client wanted
now there is a an advantage to my client
for him to not have to do the work
saving him thousands of dollars
potentially and so I went to him I
discussed with him the options he was
just like yeah let's just do it let's
let's have them come over tomorrow have
them get the work
done so that all happens then I got a
call from the appraisers and this was
the first time
with all of this happening the first
conversation I had that I was like okay
we might actually do this we might
actually be able to get this closed on
time due to the holidays the original
appraiser that gave us such a terrible
appraisal in multiple ways actually was
on vacation and so they had to reassign
the reinspection that that would needed
to be done to a different appraiser and
the second appraiser that was assigned
to do the reinspection was one of the
nicest people that I have ever
communicated with I mean particularly by
appraisal standards by appraiser
standards incredibly nice person and
he totally got he was just like hey I
can tell based on conversations I've had
with different people and I got a hunch
that maybe the lender illegally reached
out to the appraiser granted their
this happen sometimes but lenders are
supposed to be at arms length from the
appraiser but the appraiser reference
that the lender did reach out to him at
one point which I was like whatever you
know hey if you get away with it as a
lender go for it they're not supposed
to do that but apparently the lender
reached out to the appraiser and
expressed to him just how urgent this
situation was and how quickly we needed
to to get the reinspection in and so the
appraiser communicated with me and he
was just like Hey
listen I know that they're going out and
doing the repairs tomorrow again
Christmas Eve he's like I'm flexible
tomorrow I'll just swing by at the end
of the day and and hopefully they're
done with the work by then if they're
not then I'm going to keep my my Monday
as flexible as possible and this is the
Monday after Christmas I'm going to keep
my Monday as flexible as possible and
you know I'll swing by whenever they're
done and I'll I'll work up my paperwork
we'll submit this thing as soon as
possible then shortly thereafter the
lender called me and said hey I've got
great news the underwriters they they
pushed everything through we got already
the preliminary closing disclosure
so two of the the biggest concerns are
done that that was that closing
disclosure that needed to be done by I
think it was Tuesday they needed to have
it by by Tuesday in order for us to
close on time we got it prior to the
holidays so that was a big big burden
off my back because that was something I
had no control over and you know
Underwriters I I talk trash about
appraisers on here but let's be honest
Underwriters cause just as much or
more angst as appraisers in a typical
real estate transaction so they can be a
big problem as well it's just that I
don't you know typically communicate
with with them directly so it's a it's a
completely different scenario there
by the way the the appraiser said when
in my conversation with him that he
thought that that appraisal was
ridiculous he thought the nitpicking on
some of these things was outrageous but
it wasn't something he could change he
couldn't go back and say hey these
things he's this guy's nitpicking it too
much all his job was to do at this stage
in the process was to ensure that all
the things that were flagged on the
first appraisal were done he couldn't
you know redact it and say you know what
you don't need to do that you don't need
to do this because the first appraiser
took pictures very detailed pictures of
everything and so the second appraiser
needed to take basically identical
pictures showing that the work had been
done so it didn't matter if he agreed or
disagreed that was just that was his
job that was the scope of his job
needless to say I was on and off the
phone with the appr ER constantly and
thankfully he was very
communicative by the end of the day
on Christmas Eve December 24th he went
out there and there was still a lot of
work to be done it was not it was not
ready from the standpoint of of him
you know being able to take pictures of
everything the fence wasn't done still a
lot of painting left to be done so of
course everyone took off Saturday
Christmas day and the buyers returned
Sunday to work some more now I I think
by this point there's no longer a crew
now I think it's just the husband and
wife team they're trying to get it all
done they still did not get it done the
appraiser went back out on
Monday to to see their progress and
they had made good progress but still
hadn't done the fence and and more
importantly they thought that they were
done with the painting but actually they
had not taken off the storm windows off
the windows and so the actual wind
Windows themselves where that had had
all this chip paint had not been touched
yet and so they need to remove all
the storm windows again this is this is
based on the first appraisal they need
to remove all the storm windows scrape
sand and paint the inside and then
return the storm windows over
top and again the appraiser was
apologetic for this but he said that
this was based on the photos that were
taken he he could not avoid that so
this is this is Monday all right where
the the clock is starting to tick on
you know getting this appraisal in so
the next day Tuesday the appraisers go
back out and the buyers are are still
working on the Windows the
appraiser he actually this is the
crazy thing he called me a little bit
out of breath and he let me know that
there was like a really large window
that had a storm window over it that the
husband and wife just were unable to
remove himself and the appraiser
actually assisted with them taking it
down and let me tell you I thought about
naming this episode A Tale of Two
appraisers that is too vague that
that's not going to get a lot of clicks
so I'm going to have to come up with a
with a different title but but this to
me is a tale of two appraisers the one
appraiser that from his clipboard you
know just tore the house apart this is a
house that was in good shape and just
came up with all this baloney as far as
things that need to be done and another
appraiser that went out multiple times
on Christmas Eve multiple times the
Monday after Christmas back out on
Tuesday and then help them with removing
with doing some of the work I mean I
got to give credit where credit is due
that's an appraiser going above and
beyond there I've I've never experienced
anything like that that was the positive
thing that I had never experienced
before in a transaction so I was really
grateful for this guy I do not think
that we would have been able to close if
it wasn't for this guy for that
appraiser but Tuesday night they they
finish the work they were able to
send him pictures cuz it was just a few
Windows left so they were able to send
send him pictures he was able to get
everything uploaded and then by
Wednesday morning the lender approved it
and then Thursday morning we
closed and then I ended the year I was
just
like what just happened and by the
way I was out of town for for part of
this as well you know I'm I'm like
talking to the appraiser like on the on
the porch with like the ocean in the
background which Probably sounds a lot
nicer than it was the the weather is
actually pretty nice but you know me
having to deal with something that I
really shouldn't have had to deal with
was not what I had in mind while I
was over there at the beach but it is
what it is it is what it is that was
2021 in a nutshell that whole
transaction there there's a lot more let
me tell you I even in that transaction
there's a lot that I'm not telling you
guys because there are some things that
I'm not allowed to say on a on a show
like this
but there was a lot more that that
went on in there that that caused
additional stress but you guys get the
point that was 2021 in a nutshell now
will 2022 be any
easier I doubt it but the moral of
the story is make sure you're not trying
to buy a home with a lender that's about
to restructure and go out of business
right do not do that that is a really
bad idea I have lenders that I work with
that I can recommend that do a variety
of different loan products that is trust
me that is the way to go go with someone
that is going to stay in business and
that isn't going to be right up
against the gun for closing it or if
they don't close the transaction they're
going to have to hand it off to someone
else do not do that highly don't
recommend all right I hope you guys
enjoyed that thank you for listening
again we're going to have a great R
2022 I'm looking forward to this year
hopefully you guys rate review And
subscribe and download episodes to make
sure you don't miss anything all of my
contact information as always is in the
show notes if you need to reach me for
any reason let me know hope you guys
have a wonderful rest of the week
[Music]