Can a follow up appraisal kill deal after cleartc?

Bumping this because I am panicking. Apparently it came in "substantially" low.

Depends what the contract says -- ask your attorney.

I think it can because there is a 150k difference. I just saw it.
I wasn't told there was a second appraisal, so I asked a neighbor to sell off my belongings as advised. The appraiser photos have junk piled up all over the apartment, so now it has been comped against unrenovated units. How do I deal with this? The agent is from Corcoran and was handling it. It's so unbelievably unprofessional.
The buyers are trying to renegotiate.

Do you know if it's possible to get a new appraisal visit at this stage?

They can request a new appraisal and pay for the fees, but there is no guarantee

If your contract has a financing contingency, and the bank's commitment letter was contingent on appraisal, and the senior loan officer has refused to underwrite at the appraised LTV, then you may not have recourse. If only a subset of those things are true, the deal could still fall apart but you're more likely to get some earnest money out of it.

Any more detail than that really really needs to come from your attorney. (not the bank's attorney, and definitely not the brokers)

You definitely need to go over the contract with your attorney. If they were issued a clean commitment letter, and don't have a funding contingency you may have some leverage.

It certainly is possible to get another appraisal, but it may be difficult if the buyers are not on board with that.

you really need to be speaking with your attorney to understand the language of the financing contingency and whether or not there was a funding contingency.

Was the clear to close from the bank or the title agent? They are different. Sometimes title people use the term "clear to close" but they may only mean that all issues on title have been resolved and the title insurer is committed to insuring title.

PS, I agree with everyone else. This is why you have an attorney. Use him or her.

If you did indeed receive clear to close most likely the buyee had a commitment letter already issued. Once that commitment letter is issued, the financing contingency protection essentially evaporates for the buyer UNLESS there is a funding contingency.

Many buyers are not aware of this, either way funding contingencies are not always that easy to get from seller attorneys in NYC. A good buyer attorney will always try to get one inserted or at least a modified version in case at the last minute the bank finds something and decides not to fund the loan. This is very rare but it does happen. A second appraisal after a full clear to close, if it did come from a bank is certainly unusual.

We recently closed on a unit at 115 East 9th Street, Chase ordered two appraisals however they were done within days of each other.

Best of luck!

Keith

Thank you all so much - truly! That is all super helpful. My attorney doesn't explain things very fully and is not easy to get in touch with.
My understanding is that there is a financing contingency but not an appraisal contingency. The clear to close came from the bank. What happened, and was not explained to me (before an hour ago by a neighbor that my broker has relied heavily upon while I am away) was that the deadline for closing based on the first appraisal passed a few days ago. The building attorney had not issued a calculation on the flip tax in time to meet it. In order to extend the loan validity window, the new appraisal was called.
My neighbor said that she would have had no problem thoroughly cleaning the apartment had she known about it, and was upset for other reasons that the broker had kept piling up trash. The place is a complete mess in the photos, completely cluttered and not clean.

My understanding of what you are all saying is that if the buyers agree to it, a new appraisal can be called?

I am also now wondering if there is anything I can do about the agent treating the flat this way. I am very upset about this. Were I the buyer, I might not want the flat after seeing those photos.

Keith: they did have a loan commitment letter. We could not have gotten board approval without it. But from the breadcrumb trail dropped by my attorney so far, it does not sound as if the financing contingency has evaporated. I don't know how long I will have to wait for answers.

Ask your attorney if there was a funding contingency.

Keith, thanks, I know the answer to that: Yes, there was a financing contingency.

Oh I see - "funding contingency" is different. I will find out. Thanks!

I found the relevant parts of the contract but I'm not sure how to read them unfortunately.

Is this it?:
"purchaser may cancel contract as set forth below if...
any requirement of the loan commitment letter other than one concerning purchaser is not met (eg failure of the corporation to execute and deliver the institutional lender's recognition agreement or other document...)"

I realize this probably isn't helpful at the moment, but why would you have relied on 'a neighbor' to essentially stand in for you during such an important transaction? Why would your broker not have handled everything? For an overseas/out of town seller, the broker should have been sure the unit remained in suitable condition throughout (free of 'trash/clutter etc) in case of something like this happening. The deal is never 'done' until it is done. Clearly in your case it was not 'done' and your attorney and broker should have advised you of this.

I feel sorry for this poor buyer.

My broker is just awful. My neighbor had to do way too much, and was pulled in by my broker for all kinds of things and often was given information that I was not - much to my displeasure. The neighbor is a close friend and would have managed everything well and in retrospect, I would have done much better if my broker had been out of the picture. I feel sorry for the buyer too.

Do I have any recourse? I am thinking that I would like to file a complaint.

The plan was never to have my neighbor be my rep. My broker just didn't handle all kinds of things. So I don't know how that's my fault.
My neighbor has been the guardian of my apartment for many years while I was away and she has never left anything there or cluttered it, so none of this was her doing.

could someone recommend a person I could get help from/counsel me on this situation? I really don't know what to do here. My attorney is not forthcoming.

Okay, this sounds extremely off. There are half a dozen things that are F'd up here. What appraiser cares about whether there are boxes in the apartment or not?

So you're presumably selling ... a co-op? "Flip tax" implies that but doesn't necessarily prove it... and yet the board application, which must have been approved if you're CTC, doesn't contain a flip tax calculation? The board attorney should have all the info for the calculation at her fingertips; it should take her two seconds.

Is this in a small boutique building, or in an outer borough?

I digress. So anyway, poor buyer passes through their loan validity window (and somehow wasn't warned about that possibility by either their lender or their broker... doesn't *anybody* want to get paid here?)

And then, in a flat-to-rising market, we get a tanking appraisal?

And the buyer, who presumably had the margin to get through a co-op board, is suddenly hamstrung by the demand for extra cash?

Without giving legal advice (because I'm not an attorney and would never do that) the path forward seems to me to be: buyer and seller have a sit-down -- presumably through their attorneys because the brokers seem MIA -- that they do truly want to close, and the contract deadline is extended by 20 days or whatever.

Then someone, presumably seller's attorney, although it really ought to be seller's broker cuz it's her job, calls the managing agent (let's not forget the poor managing agents, they work so hard!) and tells them that there's been a bank hiccup, which is on its way to being fixed.

Buyer then calls their loan originator (not the processor, but the smooth-talking person who sold them on that bank in the first place) and explains that there will be NO PAYCHECKS unless this deal is re-tracked, stat. That's NO PAYCHECKS, SO LET'S GO FIX THIS THING. A third appraisal is ordered, which seller (sorry seller) should probably offer to pay for, because of whatever violation of neatness code ... which I still don't understand... were there actual Pizza Rats? gave us this second train-wreck appraisal. Loan originator, having realized their paycheck is imperiled, then starts to ride herd on that appraisal.

This presumably gets everything moving again. As things move there there needs to be DAILY communication between seller and buyer. Reassuring communication, full of love and rainbows. Meanwhile buyer should be talking to their loan processor DAILY about what new stuff, if any, they need.

You see what's been missing on your deal has been the people who are creating the daily communication. My last deal... a quick scan shows I'm on 65 email chains between board approval and closing. And that's not counting whatever texts got sent; that's not counting whatever phone calls got made. None of these communications were rocket science; the subject of 90% of them is, "do you have X? Can I get you X? Hang on, X is on its way."

Communication requires partners. If buyer wants the apartment, a lot of the impetus can come from their side, but someone on your side needs to be there to catch it. Deals are not automatic, as you've sadly learned, and your attorney and your broker can't both check out at the same time.

I can't think of an outsider who would step in to fix this deal (the risk of it not working and being sued for interfering in the deal seems quite high) and seller's broker might not be quite skilled enough to do this as a matter of course, but seller's attorney ought to be able to get everything started (you might have to pay extra for the extra work) and then the broker could do some of the check ins, once you lead the broker to the understanding that if there's no closing, there's no paycheck.

I'm really really sorry if it sounds like I'm ranting. I am trying hard to make allowances for the fact that during a Pandemic, it's exponentially tougher to do everything. But man, is the universe full of pain points today. I'm sorry for yours, and I send you best wishes for a speedy closing.

ali r.
{upstairs realty}

When *everyone* else is incompetent, it's usually the person breathlessly complaining who is mucking up the entire deal, and the correct response is "YTA".

Is David in town in NYC to conduct this sale, or is this being done remotely?

Remotely from outside the US. But actually just spoke to the attorney. He didn't get back to me because he thinks it is not that much of a crisis. He thinks we will close anyway.

Ali r. Thank you so much!
Yes, it turns out that we can order a new appraisal. I would have slept the past nights if I had just had that email. But at least I have it now.

...Also thanks for your detailed explanation of the process. You are right!

@david, I'm sorry that I didn't see this to relieve your anxiety one day earlier, but godspeed. Come back and let us know how it's going as it goes.

ali

ali - I will. Thanks again!

I'm having a hard time understanding why a broker would bring anything into an apartment, other than a clipboard and maybe some toilet paper.

https://streeteasy.com/talk/discussion/45994-commission-and-deal-killing

May be George remember the above link:
"When *everyone* else is incompetent, it's usually the person breathlessly complaining who is mucking up the entire deal, and the correct response is "YTA"."

I had to look up YTA.

I didn't. (*grin*)

I must have missed that thread in my social media detox back in late summer. Then I wouldn't bother saying anything more than YTA.

4yr ago needs attorney https://streeteasy.com/talk/discussion/41652-coop-looking-for-an-attorney

3yr ago feels said attorney misled him, wants takes-backsies https://streeteasy.com/talk/discussion/44087-rescinding-a-shareholder-vote-in-an-hdfc

2yr ago appraisal issues https://streeteasy.com/talk/discussion/44876-question-about-appraisals

5mo ago more appraisal issues https://streeteasy.com/talk/discussion/46002-appraisals-and-flip-taxes

Yeah ok count me in on wanting to hear the other side(s) of this story.

Richard, Are you joining the YTA camp? I just learnt the word and trying to use it.

'YTA'. How did I not know of this before? (and I work in finance) I the SE forums.

Then you'll love this... https://www.reddit.com/r/aitafiltered

Ha. I recently learnt YOLO as well.

YTA???

ITA!

https://m.youtube.com/watch?v=XTPxEwfNTJc

I looked it up and guessed correctly!

True there are 3 sides to every story.
Here's a sample of the value of an all cash offer where the 3 sides wouldn't matter.

300
"YOLO"
The reddit group wallstreetbets is highly entertaining.
I laugh at something every day.

Ha. It is crazy out there.

300 I'm still at INFO but won't be surprised when further evidence points to ESH

But you agree that we are not saying NTA.

https://www.wired.co.uk/article/reddit-aita-obsessions

I suspect this is an HDFC, as I seem to recall the posters screenname from awhile back. If I am correct on that point, there is the flip tax - and if an appraiser is not well versed in HDFC's- that could cause a large discrepancy.

Upper Manhattan HDFC's are a tough product to work with. Personally, I have had my fill- and I am now turning down a lot of business because they are so laden with difficulties I don't have with market rate buildings.