Real estate people: appraisal help!

[turtles]

I'm new but have lurked for a while. We are dealing with an appraisal situation and since I generally see great advice on this board I thought I would see if anyone could help me out!

We've lived in our home for two years. It was new construction, locked in our price a year before we moved in while the market was still fairly low here. By the time we moved in they were selling for a higher price per square foot and that price has continued to go up in the last couple of years. 

We have PMI and wanted to refinance to get rid of it, expecting that the improvements we've made (large custom deck, full landscaping, etc.) in addition to the increasing market would give us enough equity. The appraisal came back lower than we anticipated. As I was looking through it I realized that the bedroom count was wrong and the total room count was wrong (he listed 4 bedrooms and we have 5, he also forgot to include a room in the total room count). He also valued us below the lowest value the comps indicated- the adjusted prices given were $331k, $345k and $386k. He put us at $330k. These homes are in our culdesac, are the same age and we are on a larger wooded lot, have similar or more upgrades, etc. We disputed and he sent back within a couple of hours "reviewed room count, it's correct. No change." We disputed it again and he sent back, "the room count is incorrect but the norm is 4 bedrooms so no added value." 


I am so, so frustrated with this process. We couldn't build this house for even close to $330k now, it would cost us around $400k. I don't expect that value but he's undervaluing our home by so much! Our lender agreed that he's being difficult and stubborn but said there is nothing we can do. We're less than $5k away from the amount we would need to get rid of our PMI and I don't want to have to bring cash to the table. Do we have any recourse here or are we stuck?

[Deleted]

We had similar problems and talked to our mortgage broker about the situation. We were refinancing at the time and he wanted to close the deal so he called the president of the appraisal company and explained all the issues with him. They revised the appraisal and increased the value by $2500 and we only had to bring $800 to the table instead of $3300. It still wasn't as high as I had hoped, but it was better. If you aren't refinancing or don't have a loan person you may want to find out if the appraiser works for a company vs. as an independent. If that is the case, you may have other people you can contact.
Otherwise, you may need to find someone else and pay for another appraisal and see if it goes better then second time around.

[foodiemom]

Is your home a 3 bedroom and the others are 4? Around me that is a pretty big difference in what you get for your $$.

[VillainV]

Does the fifth bedroom (office) have everything your area requires for a "bedroom"? Usually it's egress, sometimes a closet maybe? And if your office doesn't have the requirements for a bedroom, they won't include it in the bedroom count....which sucks. We recently looked at houses and it was confusing as to what counted as a "bedroom" here and what didn't.

I agree that it might be worth it to find another appraiser and eat the cost of it will get you a higher appraisal value.

[madisen]

I work with someone that helped design and build the AVM used by one of the big banks and posed him the question.

Without seeing the appraisal itself and given that this is one person's opinion he mentioned a couple of things:

- he does not believe there is much value difference between 4 and 5 bedrooms, however there is something to being over-improved for an area and on the flip side if there are 5 bedroom comps available that weren't used, that's where there might be some potential additional value
- as soon as I mentioned bigger lot size, he asked if it was sloped, so even though there is a bigger lot size considerations have to be made for grade, clearing, and actual usability of it too
- he did mention of you are not working with a lender because this is not a refi it's just to drop PMI there is an agency you can complain to about your appraiser. I'll update with that info later

All in all, he was iffy on finding more value with another appraiser and declined to comment without more info.
Good luck!

[turtles]

foodiemom our home is 5 bedrooms, he only had 4 on the appraisal.

VillainV the office is something entirely separate- we have 4 bedrooms upstairs and a master on the main floor. The upstairs bedrooms are all roughly the same size with large walk in closets are are on the second floor so definitely count as bedrooms, he just forgot one and then refused to change it! The office is another issue, he listed our total room count as 8 but there are 9, it wasn't on the floor plan he created at all. It's a legitimate room but he just didn't have it on there.

madisen there are definitely 5 bedroom homes in the neighborhood and I don't believe we are overdeveloped- the neighborhood is all one builder and there are a few floor plans quite similar to ours. We chose our lot specifically because it's very flat and backs up to protected wooded area, our lot is significantly better than those of the comps he chose (they're smaller lots that back directly up to another home, no trees). We are working with a lender and they kind of said there isn't anything to be done but with the mistakes and the low value I was hoping someone knew of a way to fight it.

For reference, the home directly next door to us which is literally almost exactly the same square feet (we are roughly 50 sq ft larger) and with no landscaping or deck just sold for $375. They have an almost identical lot but a steeper slope and similar upgrades. Another home in our town, same exact floor plan as ours but with a small rec area finished in the basement is listed for $425k and I have no doubt they'll get it. Those are big discrepencies!

[turtles]

Thank you guys for your responses, I really appreciate it! I feel a little like I'm going insane today 

[turtles]

For reference,  here is our floor plan. We turned the two story living room in to a "kids retreat" as they call it which isn't shown here. We also closed off the flex room to make it an office. 


Blah. I hate that I'm at the mercy of this guy 

Attachments:

[madisen]

If you're working with a lender, they really should be your advocate here if there were truly mistakes made.

If your loan will be a fnma/FHLMC loan, appraisals now have to be sent to a system called UCDP. They then get scored from 1 - 5, 1 being best. If this appraisal is a 4-5 your lender's, so scored as a 'questionable' appraisal, the underwriter at your lender should be reviewing that appraisal carefully. As an example, my company would potentially then take the issue up with the AMC used to order the appraisal in the first place to contest.

[imojoebunny]

We have had this before (basically gave lot value for a 3,600 square foot duplex that rents for $3600 a month?). The comps she used were in a different school district (very bad) and our place has a good school. Comps were tear down 1960's duplexes and ours was built in 1905 and is historic, next to historic single family homes that sell for over $1M.

The lender could do nothing. We waited 6 months and tried again. The comps were much better 6 months later, and the value was almost 3X what "I don't know where the hell I am" woman valued it at.

[scout8]

Your lender should have a process in place to appeal appraisals. I would start there. If that doesn't get you anywhere, you could switch lenders. Then you would get a new appraisal. If that happens, be prepared when you meet the appraiser. Ask your real estate agent for comps to give to the appraiser. Provide him with a list of all your upgrades. Be very frank with him about where you need the value to come in at.

[vanillacourage]

Worse case, check how your appraisal compares to your home's assessed value. We were able to appeal our property taxes and save around $500.

[turtles]

@rennido we have the cash so we wouldn't need a loan but I hate to take money out of our savings when the value should already exist in the house, know what I mean? I guess we are kind of stuck either way.

vanillacourage I know for certain that the appraisal was less than our taxable value- does that make a difference?

[scout8]

May 27, 2015 13:41:54 GMT -5 turtles said:

vanillacourage I know for certain that the appraisal was less than our taxable value- does that make a difference?

I don't know how it works in your area, but in mine, the low appraisal could be used to help support a tax appeal.

[shell403b]

I would also pay for another appraisal.

[polarbearfans]

Get another appraisal if you think it will come back higher. When ours came in low we didn't bother because nobody ever moves from our area and there were no recent comps. We bought knowing the value was here. Now that we have bought, others are starting to sell because there is finally a recent comp (our house), so we would appraise well now :/

We brought the difference to the table to avoid PMI. I guess if we ever want the appropriate equity we would need another appraisal, but for now we are not bothering because who wants to pay more taxes?

Good luck. I think the whole appraisal process stinks, and if you get a bad appraiser even worse