Collusion?..Fraud? repairs not addressed in appraisal report

uspoet10 · Joined: 19 Oct 2009 Posts: 3 2.18 Dollars($)

Hi everyone!

I am attempting to purchase a property that is rather unique. It is an 800 sf home...totally remodeled on 1/4 acre with an 1800 sf shop with 900sf loft. It is also located on a municipal golf course.
I offered the seller $207K w/5k closing. They countered w/ 200k $5k closing. Seems the shop still has outstanding permits...elect, plumbing and final. They wanted to keep this info hush-hush. The bathroom is unfinished and there are several electrical boxes with wiring exposed. The outside still needs several pieces of trim on it.
I paid the mortgage broker $450 for the appraisal which just came back....at exactly $200k. The cost of the appraisal as listed on the report was $600. There was nothing mentioned about the unfinished bathroom or the electrical. These are can't miss items....noticeable as soon as you walk in the door.
Am I over reacting when I think possible collusion between broker/seller/agent?
The appraisal report came back EXACTLY the way the seller NEEDED it to come back.
Fraud? Attempting to keep this information from the Underwriters?
Your comments appreciated!
Thanks

Niicss · Posted: Mon Oct 19, 2009 3:15 am Post subject:

I don't think you're over reacting. I would not like to comment on the possible collusion between the broker/seller/agent but it's surprising that appraiser did not notice the exposed wiring or the unfinished bathroom. If possible, you can contact another appraiser and take his opinion regarding the property.

jheard · Posted: Mon Oct 19, 2009 7:55 am Post subject:

Hire your own appraiser to do an appraisal.

eric1 · Posted: Mon Oct 19, 2009 10:37 am Post subject:

Well yes it seems that the appraisal should have mentioned something about its unfinished condition. However, I am not sure what you are trying to do. Did you want the appraisal to come in lower? If you have not agreed on a price yet, then you should not have ordered the appraisal. do you still want to buy the home? If so and YOU think it is worth $200k, then go for it.

gmakerley · Posted: Mon Oct 19, 2009 9:14 pm Post subject:

i am incredulous that a seller would counter offer to a LOWER price than what you first offered - and with the same assistance. i don't know about collusion either, but something smells funny, that's for sure. it wouldn't make sense for anyone to miss electrical issues and an unfinished bathroom. and, of course, you're talking about a mixed-use property, it appears. i know you're not looking for a vanilla loan.

and, as eric had asked, what is it you wanted from this appraisal? and why did you offer the 207K to begin with if you're not particularly enamored of the property?

uspoet10 · Joined: 19 Oct 2009 Posts: 3 2.18 Dollars($)

As I stated originally, they wanted to keep the fact that the shop still had outstanding permits ie a clean disclosure. I was willing to do the work necessary to finalize the permits. Today I paid a visit to the county planning office and discovered the permits were originally taken out in June of 2005 and just renewed in Sept of this year. The seller added a 900 sf loft...unpermitted as well as multiple electrical runs over and above what was applied for in the permit.
When I made my initial offer, I was not aware of the permit issue. I was given a verbal through the listing agent that the seller would finish the bathroom....thereby finishing the shop. On the lower counter by the seller, that was pulled off the table and I was told about them wanting a clean disclosure ( for who? Apparently the lender!) and the outstanding permit issue.
As for the appraisal, all I wanted was an honest appraisal. As it stands right now, the appraisal leads one to assume the shop is finished....and I assume the value is based on a finished shop. Since it isn't finished the value can't be the same. I was hoping through an honest appraisal that the discrepancy between appraised value and sellers asking price could be renegotiated.
This is not a mix-use property.
This is a standard USDA rural loan.
Gmakerly, no one else believed me when I told them my original offer was rejected by the seller because it was too high!

gmakerley · Posted: Tue Oct 20, 2009 10:28 am Post subject:

yeah, your last line resonates with me too...that's why i can't figure out (regardless of all this permit discussion) why they'd want to renegotiate to a lower price. that's unheard of.

now please explain how it isn't mixed use - 800 sf home; 1800 sf "shop" as you described it; 900 sf loft. what is the shop? if it's not owner-occupied sort of square footage, then it's contrary to this not being mixed use. after all, almost 50% of the overall area of the building is made up of "shop."

unless this is a spectacular deal that you can't walk away from, i'd think you ought to be running by now in the opposite direction. make sure you get your deposit back, of course.

uspoet10 · Joined: 19 Oct 2009 Posts: 3 2.18 Dollars($)

The "shop" is what is commonly referred to as a pole barn. It has a 24 X 72 foot print, insulated with concrete floor. It is tall enough to be considered 2 stories...hence the addition of the loft which is supposed to be a storage area...not a living space. The appraiser listed it as an RV/garage/shop.
The home is a detached 2bd 2ba 800 sf ranch.
My agent seems to think that getting the approval from underwriting is more important that any of the issues concerning permits. Since the unfinished shop has successfully been "hidden" through non disclosure and the appraisal report, I don't anticipate problems from underwritering unless they want to conduct a field review.

gmakerley · Posted: Fri Oct 23, 2009 6:29 pm Post subject:

i'm not convinced that this is an eligible property. but if the appraisal is so unprofessionally completed, any underwriter worth the ink in his or her pen will know it.

i don't know about collusion, fraud, etc. but something stinks. i just don't know quite what it is.

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