This new law will slow down the real estate buying process.

Now when buying a Boston condo it will require two sales pitches, one from the local real estate broker and the other from Fannie Mae.
The first one sellers and buyers are aware of, but the second one may create a slowdown in the Boston condo market.

Fannie Mae announced a new requirement that may slow down the purchase of a Boston condo by creating more disputes over the sales prices between sellers and buyers.

In a recent Washington Post article they explained the basics of the program:

Starting Jan. 26, Fannie plans to offer mortgage lenders access to proprietary home valuation databases that they can use to assess the accuracy and risks posed by the reports submitted by appraisers.”
“The Fannie data will flag possible errors in the appraiser’s work before the lender commits to fund the loan, will score the appraisal for overall risk of inaccuracy and may provide as many as 20 alternative “comps” — properties in the area that have sold recently and are roughly comparable to the house the lender is considering for financing but were not used by the appraiser.”

Now with additional sales information provided by Fannie Mae, the lender can be asked for an explanation from the appraisal company for any discrepancies and request an amended appraisal before any loans get approved.

This will now create an added step in the Boston condo buying process because it can now dispute the price of a Boston condo to be bought/sold, this could add time and money to the closing process because of the additional work that could be required from the appraiser.

One might ask: Why is this happening? The reason is because Fannie Mae wants lenders to make informed decisions when agreeing to the amount of a loan that a buyer will be approved for. According to Fannie Mae:

“Excessive valuations create the risk of future losses to lenders and investors if the borrower defaults and the house goes to foreclosure.”

What is the process now?

Boston condo market

Boston condo market

New laws that will impact Boston condo market.

As a seller, you put your Boston condominium on the market, picked a real estate agent who has helped you determine the best price to list your home for, lets say $430,000, and the agent found a buyer willing to pay that price. The appraiser comes to the condominium and agrees that your condo is worth the asking price and creates a report that puts everything in place to proceed with the closing.

As a buyer, You’ve found your dream condo, in the perfect Boston area, in the right area near your workplace, with the perfect condo roof deck, at the high end of your budget, but all the pluses are worth it. You agree with the $430,000 prioce and start daydreaming about living in your new Boston condo.

What happens after January 26th?

The lender submits the appraisal report to the new Fannie Mae program and they come back with “lower-risk comps” that value the condo you have under agreement at $430,000, but the new comps state its only worth $400,000. The lender then turns to the appraisal company to justify the $30,000 difference, which this adds time and headaches to the process.

If the lender does not agree with the reasons for the price difference they will not lend the buyer the amount they need to purchase their ideal Boston condo and the amicable, agreeable sale turns into a heated justification of the higher price. The buyer may even have to give up on the condo if the financing isn’t there.

An article by Housing Wire shares the appraiser’s point of view:

“The bottom line, appraisers say, is this could lead to delays to closings and higher costs, as well as a depression of prices in markets where prices are rising.

Appraisers complain that if they have to justify every step of their comps for their valuation, rather than those coming from the one-size-fits-all evaluation from Fannie, it will delay closing, throw off buyer and seller timetables, and delay real estate broker commissions.”

If your in the market to buy or sell a Boston condo please contact me and I’ll help you through this new law and make it a win-win for both parties in buying or selling a Boston condo.

For more information on how to be a Boston condo owner please contact John Ford at 617-720-5454. You can also email at

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