The Tidewater Initiative
When a VA buyer’s appraisal comes in low on a home purchase is referred to as “Tidewater”. The buyer is not be able to get a loan for the current sales price if the sales price is higher than what the home appraises for. The buyer would have to either pay out of pocket the difference, ask the seller for a reduction in the sales price, or challenge the appraisal.
Once Tidewater is invoked you have two days to provide additional sales comparables to support the current sales price. If you do not provide supporting comps within two days you will not be able to challenge the appraisal. If the comparables are not approved within two days or you do not respond within this time-frame you have to take an alternative course of action.
1) If you are a buyer, you can ask the seller to reduce the sales price, so you can get a loan.
2) If you are the seller, you can opt to reduce the sales price, so the buyer can get a loan.
3) The buyer can pay of pocket the price difference in appraisal amount to the sales price.
4) The buyer and seller can split the difference in the appraisal amount and sales price.
5) The buyer can back out of the transaction if the seller agree to any of the above.
6) If you are the seller, you do not have to cooperate, and the buyer can opt to back out.
7) The easiest method – challenge the appraisal within two days of Tidewater being invoked.
In March 2015, I personally experienced Tidewater. This was the first time I’d ever even heard of it since receiving my real estate license in August 2003. Since I was representing the buyer we first asked the listing agent and seller for a price reduction. They refused to cooperate with any price reductions. The buyer really wanted to complete the purchase and the home was the best priced home in the entire zip code. I ran supporting sales comparisons, which in fact supported the price, we challenged the appraisal, and were successful.
Closing on Tidewater
If you are in a transactions where there is a VA buyer and the Tidewater Initiative is invoked, you need to respond as soon as possible. Remember you have two days to respond. It is your job to present the most accurate information and represent your buyer or seller to the best of your ability. Not every appraiser is going to be familiar with your market. In this event I was representing a disabled veteran who really wanted to get into the home. There was very limited inventory in an appreciating market. The buyer would not have been able to purchase a home in this zip code if we did not challenge the appraisal.
Brian Hall Properties
As a real estate professional it is your job to get in there and fight for your client. In this situation the home was 1.5 miles from the beach and appreciated over $50K in the past year. The buyer would not be a home owner in this neighborhood ever. If you need more information or appreciate the blog please feel free to email me on my contact page. If you need an outstanding real estate broker – please give me a call.
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Brian Hall Properties
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