Things were going along so well, you knew it couldn't last. We shared the inspection report with the sellers, and to our complete surprise, they agreed to replace the roof. No negotiation, no splitting of costs, they would simply handle it. We sent them an offer addendum, and they signed it without hesitation.
Some of the remodeling quotes we've received have caused us to clutch our hearts (and my inner calculator starts ratcheting up). Replace all the windows with new vinyl (not paintable fiberglass)? $10,000. Sewer lateral? $4,100. Put in wood floors in the living and dining rooms and front hall? $7,000 for 500 square feet. (That last quote was from the champagne of wood floor companies - we will now be looking into the beer price range).
The mortgage broker let us know that the underwriter asked for a little clarification from the appraiser, wanted to know why he had gone so high (just over our $360K offer). He provided, they approved the loan and the broker requested the "loan docs." The underwriter did mention that the appraisal had to go through a "desk review," but suggested that this was a formality, no reason we couldn't move ahead. I was beginning to think that maybe we could close by Nov. 30.
Then on Friday, it all caved in. We got an email from our broker saying that the desk review appraisal had come in much lower than our offer - just $300K, in fact. He was flabbergasted, our agent was flabbergasted, even the rep for the underwriter was flabbergasted. The desk review is just what it sounds like - some person in suburban Los Angeles looks at the appraiser's reports, pulls their own comparative prices (and in this case, they pulled short sales and foreclosures from around Richmond, although this property is neither). Does not visit the property, doesn't know the neighborhood - but makes the final decision on appraised value. No appeal.
So our loan went up in smoke. We are scrambling to restructure our loan and work with another lender - conventional, not FHA - and of course pay for another appraisal. We let the selling agent know, he was very understanding, and shocked at the low appraisal. I am now back to work on my house ulcer.