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house mini-dramz, but all is well (sorry, long)
Hopefully there's a lesson or two here in case you are getting ready to start shopping...
So things started going like gangbusters on Friday with the papers to sign and setting up appraisals and inspections... My checkbook is already choking - but I was expecting this. Thank goodness for our tax rebate and J's job.
Because we're going FHA on a flip, this requires TWO appraisals (2 x ~$400, ouch). Also, it narrowed us down to only one possible lender who will process FHA-flips. A couple of months ago, you couldn't do FHA on a flip (investor-owned property) - but the law changed due to the economy.
We offered 290, he countered 299,900 (list) and we accepted. So, the preliminary appraisal (based on comparable sales) came back low: 290.
Immediately my REA and MB (mortgage broker) went to work. The MB contacted the Seller and said, "Dude, you're going to have this problem with everyone - why not lower the price and keep this buyer?" Per our REA, our other options were to bail out (and lose the house and a $3K good faith deposit - ouch) or pay the $10K difference out of pocket (ouch, again). We were hoping that the appraisers would see the value in person and then we'd be ok anyway. At this point, my REA and MB offered to pay for 1/2 of the second appraisal - which was nice of them.
So, over the weekend the first appraiser said, ok, 300. The MB submitted that to the loan underwriter, who in their verification process said...no way is this house worth 300...I say 285 MAX. UGH. He basically threw the appraisal out of the window. Doesn't matter that the house is bigger and has upgrades - all that matters is the comparable sales...and the area has been selling for less because they are smaller and in less than turnkey condition.
Then, MB went back to the Seller and said what he said before. The seller agreed to split the $15K difference with us. He lowered the price to 292,500 and we have to come up with $7,500 in addition to our down payment and closing costs. OUCH. We're basically losing our first time home buyer tax credit, so no furniture spree for us. 
The good thing is, this reduces our loan amount, our monthly payment and future interest paid (~$40,000 over the loan lifetime). Also, when nearby houses sell that are truly comparable, we'll have "instant equity" because our value will increase based on the comps increasing. Thankfully, the house doesn't need any work done to it right away (knock on wood for inspection!), so we should be good for a bit.
Bottom line...we're still getting the house...it's just costing us more up front. So, the lesson is: count on way more expenses up front than you expected.
Re: house mini-dramz, but all is well (sorry, long)
It's a lot, right? Amazing how fast things start moving!
We're supposed to get the keys on May 11.
Girl, I have never ever heard of anyone whose had more trouble buying a house than you! I like to think its because you will discover a river of chocolate running underneath or an oil well and become millionaires in the future.
(If thats the case, I fully expect to be invited to the chocolate river party).
Honestly though, I'm glad its worked out and furniture is overrated, especially with a walking around little Scarlett. Less things for her to bump her head on, right?
Ugh, that sounds like a major headache. I'm glad it worked out though. I know a lot of people who had to back out on an offer because the homeowner wouldn't come down to the appraisal price or budge at all . . . and then of course the house sold for thousand less months later. I'm glad you were able to work something out.
May 11th is SO SOON!
This is very true. We had to scramble at the last minute for additional funds. Once those keys are in your hands it will be so worth it!
This is just crazy! I can't believe all you're going through with a house... Glad you're still getting it even if it is costing a little more... I'm sorry!
keeping fingers crossed for the inspection!!!