Oddball properties create lending conundrum

Difficulty finding “comps” causes mortgage underwriters to balk at unique homes

New York /
Sep.September 05, 2014 10:55 AM

Unique homes may hold a certain appeal for homebuyers seeking a residence that is off the beaten path. But securing financing for an unusual property can prove challenging.

Such out-of-the-box dwellings often prove difficult to value, as appraisers may struggle to find a comparable home that can serve as a pricing reference point. The issue often arises with homes that are unusual for a region. “What’s normal in Beverly Hills would be unusual in Brooklyn,” Peter Grabel, managing director at Luxury Mortgage of Stamford, Conn. told the New York Times). Homes that are atypical for a neighborhood or even just unusually large are also difficult to accurately price. The so-called “white elephant” — a home grander and more spacious than less expensive surrounding properties — can also cause some appraiser head scratching. “Green” homes that require consideration of projected energy savings can prove tricky on the valuation front as well.

Even if lenders are willing to extend financing for such unusual homes, they will often offer far less than is typical with a more run-of-the-mill property for a given area. As a result, buyers should brace themselves to cough up more than the usual 20 percent down payment, Tim Sickinger, a senior vice president of Atlantic Residential Mortgage in Westport, Conn. told the Times.

Smaller banks typically are more willing to offer up financing for unusual properties, as these financial institutions are increasingly keen on growing their market share, according to the Times. [NYT]Julie Strickland


Related Articles

arrow_forward_ios
Mortgage applications reach pandemic peak

Mortgage applications reach pandemic peak

Mortgage applications reach pandemic peak
One New York Plaza, One Madison Avenue and 605 Third Avenue top the list of largest real estate loans. (Brookfield, Wikimedia Commons, Fisher Brothers)

These were the largest Manhattan real estate loans in December

These were the largest Manhattan real estate loans in December
(Getty)

Mortgage applications fall during holidays even as rates sink

Mortgage applications fall during holidays even as rates sink
(iStock)

China limits property loans to curb housing bubble

China limits property loans to curb housing bubble
Home purchase applications are down due to high prices.

Mortgage applications fall as home prices soar

Mortgage applications fall as home prices soar
The Mortgage Bankers Association reported an increase in applications for home loans during the second week of December 2020. (iStock)

Mortgage applications rise as rates reach another record low

Mortgage applications rise as rates reach another record low
Future of Fannie, Freddie privatization is uncertain

Future of Fannie, Freddie privatization is uncertain

Future of Fannie, Freddie privatization is uncertain
From left: The Grace Building, 250 West 57th Street, 32-42 Broadway, and One Union Square South (Photos via Wikipedia Commons, ESRT, Google Maps, and StreetEasy)

These were the largest Manhattan real estate loans in November

These were the largest Manhattan real estate loans in November
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...