Oddball properties create lending conundrum

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

TRD 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

The number of closed sales fell by more than 14 percent year over year in the third quarter (Credit: iStock)

Low mortgage rates are killing Manhattan’s all-cash buyer

(Credit: iStock)

Despite housing market slowdown, mortgage lenders just had a great second quarter

The Daily Dirt: The dark cloud hanging over buyers

Trump proposal would make getting a mortgage harder for homeowners deep in debt

Everything you need to know about Realogy and Amazon’s TurnKey partnership

Almost 40% of homes in the US are

Banks see uptick in mortgages, but remain wary ahead of potential Fed interest rate cut

Trump official to pressure Congress to privatize Freddie and Fannie