Q. I won the bid on a house at a public auction. I was required to make a deposit of $20,000 and now an occupant will not allow my mortgage appraiser into the property to do an appraisal. Without the appraisal, no one seems to be able to do the loan without 30 percent down. Is it possible to have a mortgage company do a drive-by appraisal with the purchaser making only a 5 percent deposit on the loan?
A. I’m confused. Did you know before you made your bid that there was an occupant in the house? Have you been inside to make sure it’s in good (or at least decent) condition? Did the advertisement about the auction indicate the house was occupied?
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You asked if the mortgage company can do a “drive-by” appraisal. In today’s economic condition, when banks and mortgage lenders are being carefully scrutinized, I seriously doubt that any lender will permit such a basic appraisal.
What will happen to your $20,000 if you don’t go to settlement (also called escrow)? I suspect that under the terms of the auction sale, if you cannot close you will forfeit that deposit.
Word of caution to everyone: If you want to buy a house at a foreclosure sale, make sure that you do your homework before you make a bid. Get a title report; inspect the house, inside and out; and find out what the outstanding mortgage is that you will have to pay off. Are there any tax or other governmental liens on the property that will have to be paid off? Are the utilities in place?
These are some of the questions that anyone considering buying at a foreclosure sale must answer. I also suggest that you retain a real estate attorney to walk you through the process.
Q. I recently read your article about the new law regarding residential loans. The article helps, but can you give me a Web site that will tell me what is considered a reasonable amount for charges for different areas?
A. I don’t know of any Web sites that provide this global information. The best I can suggest is to do some comparison shopping in your area. Talk with lenders, lawyers and real estate brokers, and ask them what you will be charged for such items as title search, appraisal fee, credit report, lender’s underwriting fee, title insurance, settlement (or attorney) fee and recording and notary fees.
It’s always a good idea to shop around. You may find two lenders offering you the same interest rate, but their upfront charges may differ dramatically.