How do you fight a bad appraisal ?

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Real Estate Broker/Owner with Coldwell Banker United, Realtors 713-581-4702 0524744

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

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Theresa

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.)

Jan 27, 2010 02:26 PM #14
Rainmaker
239,207
Gene Allen
Resh Realty Group - Virginia Beach, VA
Realtor Hampton Roads Real Estate

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.

Jan 27, 2010 03:28 PM #15
Anonymous
Anonymous
Vicky

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?????

Mar 09, 2010 01:30 PM #16
Anonymous
Anonymous
Heather

Our appraisal came back 40,000 less b/c they included short sales and foreclosures in their comps!  Can you say stupid!!!???

Apr 20, 2010 04:03 PM #17
Anonymous
Anonymous
Arlan

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

Jun 19, 2010 12:56 PM #18
Anonymous
Anonymous
Arlan

CORRECTION::::    Sorry, we are PROTESTING tax assessed value !

Jun 19, 2010 12:59 PM #19
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Anonymous
Kingofbytes

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....

Jul 06, 2010 03:35 PM #20
Anonymous
Anonymous
Nate

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!

Jul 15, 2010 12:12 AM #21
Anonymous
Anonymous
Steve

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

Aug 02, 2010 02:54 PM #22
Rainmaker
239,207
Gene Allen
Resh Realty Group - Virginia Beach, VA
Realtor Hampton Roads Real Estate

Because he can is the best information I hear.  Not much you can do. 

Aug 02, 2010 04:00 PM #23
Anonymous
Anonymous
Michael

I had an appraisal on my home to remove a hold on my mortgage (Chase thinks the value has dropped off the shelf). The appraiser was in and out in less than 15 minutes.  I thought that seemed a bit fast but shrugged this off.  When the report came it was full of inaccuracies and did not include one of the many improvements we had made to our home (windows, doors, gutters, garage door, fence, retaining wall, interior paint and trim, exterior paint, etc).  The comps used were the two lowest sales in the past three months.  

The value was listed just below the value Chase required to remove the hold.  When I challenged the appraisal with all of the factual inaccuracies and with other comps the result was the same, no value change.  The appraiser stated that the other comps had a better view therefore they were worth $65k more than the appraisal of my home.  

The moral of the story, the appraiser feels the need to save face when confronted with correct information so he sticks to his guns an screws the consumer that pays his salary.  I will be filing a complaint with the state board and hope to see this guy dealt with accordingly.

Sep 07, 2010 11:35 PM #24
Anonymous
Anonymous
HUGH

LOW APPRAISALS MEANS APPRAISER WILL GET TO DO IT AGAIN WHEN THE HOUSE GOES UP FOR SALE WITH A NEW BUYER DO THE MATH DOUBLE THE NUMBER OF APPRAISALS DOUBLE THE APPRAISER INCOME YOU BET IT'S A SCAM . KEEP IN MIND NOT THAT MANY HOUSES ARE UP FOR SALE SO THE APPRAISERS ARE STARVING.

Apr 04, 2011 11:16 PM #25
Anonymous
Anonymous
thinkfreeer

I recently applied for a refi and was basing my expected value on Zillow and original price plus improvements and market conditions. The appraisal came in 12% low. I had paid a "non-refundable" mortgage application fee that would be credited at closing. But the low appraisal killed the refi. I have heard that an acceptable range of appraisal accuracy is +/-4%.

In reviewing the appraisal, I saw that the appraiser left out about half of the square footage of the house. It has a large addition integrated to an older cape (designed by an architect), with an in-law apartment on the first floor and two large rooms above. The appraiser left out the entire addition in the area, so the selected comps were based on comparison to the cape only with "amenity" adjustment for the in-law apartment. I think this is a gross error.

Your thoughts?

Jun 17, 2011 01:15 PM #26
Rainmaker
148,938
Danny Frank
Coldwell Banker United, Realtors 713-581-4702 - Pearland, TX
The Real Estate Expert

One thing you can do is to go to a different lender and talk to them about what happened... You can use any lender to do the refi... You don't have to go with the one you used or your bank... I have found that by using a mortgage banker rather than a bank, you will get better results.

Jun 17, 2011 01:53 PM #27
Anonymous
Anonymous
Scott Boone

We bought a 5 acre piece of property in April of 2010 for $63,000. It was appraised a bit high because it is on a golf course. We are in the process now of building a house on the property, and an appraisal was done last week. It came in at $40,000 for the land... a $23,000 decrease in value in one year!!! I am livid and my bank had me write a letter explaining my concerns, and had the appraiser rework the numbers. He came back $2,000 higher... big deal. What are my options? The original purchase was with the same bank I am getting the construction loan from. This tells me that they were ok with lending me $63,000 for the land a year ago, but now they say its not that valuable??? HELP!!!

Jul 01, 2011 02:08 PM #28
Anonymous
Anonymous
Jacade

All of you are right and at the same time have a focus thats a little narrowed.  You need to look at the banking industry as a whole and understand the fact that its acting on its best behalf.  To sale a home new in distress is good for the bank and will reflect so in the appraisal to refi a home under any option is not good for the bank because of increased exposure so there hand picked team will short the appraisal.  The market has to be looked at from the inside out.  Banks esp. large ones are in a win win situation right now regardless of what the media is saying.  Remember all of the subprime mortgages had PMI.  Research the banking industry and you will get answers.  Also theres alot of very bad ( LAZY ) appraisers, appraising homes

Sep 17, 2011 12:57 PM #29
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Anonymous
Carol Summers

I have my house sold  and the appraisal has come back $46,000. lower than the selling price, and the buyers are in total agreement that the appraisal is way off the mark. What to do next?

Sep 20, 2011 08:50 PM #30
Anonymous
Anonymous
Les Burbank

We are yrying to refinance.  We had a bad appraisal.  He used houses in lower income areas and houses that had not sold.  So we failed. What can we do?

May 02, 2012 03:13 PM #31
Anonymous
Anonymous
Dave

In 4 years I have had 7 appraisals done on two houses.  I purchased, got two appraisals right in May 2009, which is when the HVCC got put in place.  That first set was with different banks and they were $40k apart.  The low one missed rooms, was a drive by appraisal and was horrible.  I filed a complaint with the Texas Appraisal Review Board, showed both appraisals to the reviewer and his idiotic comment was, 'I wonder what a third appraiser would have said.'. My comment back was that it probably would have been on the higher side because the bad appraiser missed entire rooms.

Since 2009, I refinanced twice and sold the house.  The quality of appraisals varies greatly and not nearly enough reporting to state authorities is done and the states do not have competent regulation boards in most cases that I have seen.

 

In today's world the appraisers now just default to +- 2% of the assessed value.  We should completely stop the appraisal process and use large scale city assessors who annually review property valuations and just set price per square foot regulations based on some kind of trim level.  That's all that happens now.  How on earth will we ever build new houses in undeveloped areas?  Oh, we aren't and people wonder why the economy is stuck in the granny gear.

 

Here's how to fix the problem.  Vote out incumbents, insist on real estate reform and stop performing real estate transactions if you can.

May 18, 2012 01:57 AM #32
Rainer
176,144
Dave Sullivan
www.TheCreditGuy.TV - Birmingham, MI
The Real Story on Your Credit Score - TheCreditGuy
 

Excellent information I will forward it if that is ok? thank you!!!

Nov 23, 2012 08:11 AM #33
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