How do you fight a bad or low appraisal? I have a listing and a contract on said house. We had a contract on this house which I have very good comps on and the appraisal came in $4600 lower than the contract price.... The buyer is walking and I am left holding the bag on 2 houses. I have never had a house not appraise. Is there any way to fight one of the biggest banks appraisal?
Please visit www.danfrankrealty.com
That's a tough one. Pricing real estate is, IMO, an art form. It's getting tougher and tougher these days with so many homes so overpriced and so few SOLD properties from which to base a price, not to mention falling prices. The comps used to price may be way over market by the time the home sells. This is probably an agent's toughest job.
I've had agents get low appraisals on their listings and, usually, if they speak with the appraiser and give the appraiser the comps from which they priced the property, the appraiser will adjust upwards.
Can't blame the buyer for walking when they're being asked to pay $XXX over appraised value.
I've never had a low appraisal, but I have a secret system.
Danny - Tough outcome to what otherwise must have been exciting.
Furnishing the comps can help but if the Buyer wants to believe the comps, there isn't much you can do other than to furnish more comps. What this appraiser is doing is in response to the slowed market -- picking the lowest comps s/he can find and it has started to happen (again). What the bank will quickly learn, however, is that loans that don't close don't make anyone any money and they will be more reluctant to call on that appraiser the next time.
Ask your buyer and seller if they would split the difference then see if the appraiser will accept some of the comps you provide. For some markets, the said part about this is that the appraiser may be right -- there has been a slip in value in many parts of the country and the appraisers have been feeling the heat to make sure they are being conservative.
"I've never had a low appraisal, but I have a secret system."
OK now, why not share it with the rest of us Lenn?
Whenever i`m stuck with a "LOWBALL"I tell the seller to pay for an independent one and than match ours with the buyers.
It`s helped many times in a situation like yours!
Few times I had them when bank orders appraiser that is not from my area!? You can ask them to revise the existing one or insist on getting new one done and offer to help with the cost. However if buyers get scared and run there is not much you can do. Just one more great thing to deal with in this business of ours! Have a great 4th !
Danny:
If you wold have been working with a mortgage broker, the loan officer can appeal the appraisal at the lender and at the same time place the loan somewhere else simultaneously. This is one of the many advantages with dealing with a good mortgage broker.
The problem you have seems you had a buyer who was going through a bank. This is a one shot deal! They get turned down, you lose.
Let's peel back the skin of the onion a little further. The real problem could be the buyer is weak. There may be a credit gliche, employment problem, reserves problem, too many inquiries that may not be seen at first pass but spooks any underwriter. What many do not understand in this automated world is there still remains discretionary underwriting. I know in over my 26 years of originating that on more than one occasion I've had an underwriter cut a good appraisal just to t.d. the deal. This is very common.
Again, an experienced loan officer can expose the problem to the underwriter at the beginning of the process and use LOXs or addendums or compensating criteria to offset the weakness to get the deal to close. The bank's loan officer will get paid on Friday whether your deal closes or not.
Find an experienced loan officer in your area and work with him/her as a team and you will start seeing your money piling up in the bank, nothing but blue skies, more free time, early retirement and abrighter tomorrow.
As Mark Twain once said, "A banker is a fellow who will gladly lend you his umbrella when the sun is shining, but wants it back the minute it begins to rain".
I love the banks. I make my living on bank turndowns!
BlOG ON!
Remember when telling an appraiser he is low you are telling him that he didn't do his job correctly and most people don't like that. What we do here is to appeal to the underwriter to look at the comps that we send over.
The seller won't come down $4,600 to sell his home today? He will put it back on the market and hope he gets another offer at full price and the appraisal to match? You are loosing two deals for $4,600? You two can't come up with a comprimise? For that amount of money its not worth putting people back in my car. I would reduce my commission by that much and move on.
How about a really bad appraisel for a REFI... The house is remodel and had over 250k in improvements on the property by the owner w/in last 2 years... including a new, larger kitchen with honed black granite countertops, 2 sep sinks, new appliances, new designer family rm w/ 14 ft library bookcase w/ brass rail ladder, vaulted ceilings, cove lights, fireplace., expanded master bath 28 ft long - deluxe!, new carport, new 40 year roof, new cent AC/Ht, hot water on demand and so muchmore the works!
This horse property w/ 6 stalls, barn, large storage rm, tack rm, work rm, arena etc came in at 465k at 175 sq ft... lower than any of the comps or sale prices that were dud homes with property no remodeling, original 1962 kitchens, smaller lots and 1000 ft less square footage... yet those other properties had $235- 400/sq ft... The property should be at 675K conservatively..
The owner lost the locked rate and the appraiser appeal (by the same appraiser) and is filing complaints w/ state board... but what recourse do they have? the rates have gone up now... The Obama plan?
This was not a good appraisal. off by 35%
Advise?
I just attemped to buy my first home. I have excellent credit, had more than 20% to put down and had gone through the whole process (lawyers, inspections, etc.) The appraisal was done by an "approved" appraiser specified by the lender (a mortgage broker for GMAC.) The appraisal came in quite a bit lower then the price the sellers wanted, but we re-negotiated a new price and signed a contract. The new price was over the appraised value but worth it to me, as I had enough reserves to make up the difference. Then 1 week before closing, the underwriter rejected the appraisal of their own person and knocked it down so that the selling price was unacceptable to the sellers and I could not come up with the difference out of pocket. My deal is off and I feel like what the underwriter and appraiser did was underhanded and wrong. If we had gotten the lower value the first time, we (seller and buyer) would not have spent money on lawyers, surveys, inspections and all the bills we are stuck paying for nothing... oh, yeah and I have to pay that appraiser 300 bucks for his "professional services". Sorry but I DO blame the appraiser AND I also think it should be illegal for the underwriter to reject an appraisal since it was not an independent appraisal but done by the guy they specified in the first place. OR they should have to pay for all the stuff we paid for based on reliance that what the appraiser said was accurate the first time. This house is small (under 1300 SF) but sits on almost 4 acres and is very unique. They said they could not find enough comps. So what they are comparing to is not comparable, as the ones they used did not have a large lot. Also now they are actively searching for a certain percentage of foreclosures to add into the calculation. It sounds to me like they are falsely deflating values (exact opposite of what was going on before but still just as wrong.)
It is a complicated world out there and why the underwriter did what she did I don't know. Hopefully you will be able to make it work. Perhaps another bank may look at it differently.
I just had an appraisal for a property I want to purchase come in at $62,000, yes you are seeing correctly. This is not a dump, in a good section of town, 3000 sq ft brick home with 2 fireplaces, hardwood floors throughout, 4 bedrooms, 2 1/2 bath on 2 acres. Anyone know where I can buy a home like this for $62000? Closest we could find in the area was a 3 bedroom 2 bath home on 1.5 acres, 2500 sq ft for $155,000. What's wrong with this picture?????
Our appraisal came back 40,000 less b/c they included short sales and foreclosures in their comps! Can you say stupid!!!???
Need suggestions. Home is in the midwest in a nice wooded golf community. Our home has been updated since we bought 8 yrs ago & originally paid 275,000. Our "taxed assessed" value is 320,000 , the banks appraiser returned an appraisal for 260,000, nothing but good things said on report w/ home in very good condition. This is a HUGE difference. We are currently protecting the tax assessed value, Q: Are we s.o.l. with the refi since the appraisal came in so low ?
Thanks, Arlan
CORRECTION:::: Sorry, we are PROTESTING tax assessed value !
Would love some advice on what I believe to be a bad appraisal for a refi.
Came in at $375K. Should have been around $425K. Lowest comp per SF on 5 houses was $131/sf. So mine is at $107/sf which isn't even close.
So I'm sitting here going WTF! and to top it off, not 1 comp was in the 3000+ sf range. My home is 3400sf with many upgrades. The stock home across the street with 2900sf just sold for $398,900 and was a complete builder special....no nice kitchen, etc.
Any advice? I'm in the NH Seacoast area....
I wear a few hats in the world of real estate. I hold an appraisal license as well as real estate license. I'm active in both but realized very quickly that there was more money to be made in "flipping" real estate. I had the skill set from the appraisal side of things to realize I would have a niche. So this statement comes from the prospective of one of my flips. Obviously I can't appraise my own property but I do have the knowledge to know what to price it for, how long it will take to sell, etc. Long story short it's happened multiple times on different homes. I get the home under contract in just a fews days (it's advertised on the MLS so it has full exposure to the market). Often times I have multiple offers. Because it is a flip, the underwriters require 2 appraisals and it about 50% of the time one of the appraisals comes in low. The appraiser legally can't talk to me as the agent because of the HVCC (Home Valuation Code of Conduct) but I do inform the appraiser via the MLS listing that there were multiple offers and 40+ showings in just 1 week on the market. To me, and everyone else, that tells me that the market is willing to pay the price I'm asking. An appraiser is supposed to REFLECT the market yet it's not happening. The system is flawed as a result of appraisal management companies over charging the consumer for the appraisal and then hiring the cheapest appraiser they can find that will return the report very quickly. The cheaper the appraiser is hired for, the more money the management gets (the spread). Cheap appraisers = poor reports. I think a lot of the better appraisers are getting out the industry for this reason. That's my soap box for the night!
Is there anyway to report a bad appraiser? I provided more recent and accurate comps to the appraiser and he is still refusing to use data. I can't understand why an appaiser would be ignoring data when the data he used was totally in accurate.
Steve
Because he can is the best information I hear. Not much you can do.