Ugh, appraisal came back...

[adlove]

WAY low. Like, almost 100k under list price, 80k under agreed upon purchase price. I am devastated. We are waiting to hear back from the seller's agent to find out what the two adjacent homes are under contract for (it's three new builds by the same builder). 

The market here is so crazy right now, there's just not much available and the comps are not true comps, so I feel that though the appraisal is correct in being under purchase price, it is wayyyy to far under in my opinion.

anyone other buyers been in this position? What happened and what did you do? We are willing to walk away if the appraisal is found to be accurate, and the sellers don't agree to come down on the price.

ugh, totally heartsick over this. 

[sailorgray]

We were "talking" on here a little bit ago about appraisers sucking. Some don't even go out to the houses. My parents had a terrible experience with one. He used falling down twin homes as comps for their 4 bedroom, totally renovated single family brownstone. Mrs.J on here had a recent experience where the appraiser said her new home was actually commercial. I am sure she will tell you about it. Don't lose hope yet.

[sailorgray]

Here's the thread:

pandce.proboards.com/thread/122081/derp-appraisal-updated

I really hope things work out for you.

[urbancowgirl]

No advice, just wanted to say I'm sorry. That really sucks. I hope everything works out for you.

[mrs.jacinthe]

LOL, sailor totally pegged me. Here I am to talk about crappy appraisers. Like she said, ours totally sucked beyond any level of suckitude I've ever seen before. I was flabbergasted by the whole "commercial property" thing.

Do you have the appraisal report? If so, check the comps they used - if they're ridiculous, you may have a call to go back to the appraisal company and request a second "do-over" appraisal. Otherwise, you will either have to walk or SERIOUSLY negotiate. Hopefully the seller's agent can come back with better comps for you, though!

[boiler717]

Oh man I'm sorry! I'd see what the builder is suggesting.

[ssmjlm]

We didn't have an issue with our purchase appraisal, but the company our mortgage company used for our refinance was awful.

We have IMO a nice, somewhat updated 2 story colonial with a 2 car garage, crawl space and vinyl siding.

A comp to our house is NOT a one story, one car garage, on a slab with falling down plywood kitchen cabinets, although that was one they used.

It's really difficult out there when you don't have comps that are somewhat close and they go more by an address on the street vs house design.

[tripleshot]

We built this summer and the appraiser from the first bank came back like $50k too low. He said there was no new construction in the area. Our whole neighborhood is new, plus inlaws live in the same small town 5 minutes away in a new construction neighborhood. Then he used comps from the other side of town in a run down area.

So we pitched a fit. Our loan officer pitched a fit. Our builder provided relevant comps in the same small town. We emailed the VP at the banks corporate office who then had the regional manager look into it. But they refused to get a second opinion appraisal or see the faults in the first guy. I even called my realtor (who sold our old house) who owns a KW brokerage and explained it all to him. He agreed it wasn't done right.

We went to a second bank and the appraisal came back fine. It delayed us about a month.

[IIOY]

I feel as though I constantly hear stories about lousy appraisals. General question: is there a way to ensure that you receive a fair and accurate appraisal? Or is this just part of the game?

[lb2006]

We sold our house in October 2011. We purchased it in May 2008. We opted to have our house appraised prior to listing it so we'd have a ballpark idea of how much $$ we'd need to bring to the table. It appraised for $75k less than we paid right before the housing market crash. We also didn't HAVE to sell our house, but wanted to try.

We lucked out & had a cash buyer who just sold their $1mil house and didn't care what our house value was - they just wanted a quick close.

For our most recent house, we felt we had a fair appraisal, as we ran all of the comps prior to purchasing. I think appraisers are being VERY careful now, which is great. Even when the numbers don't reflect what we'd prefer to see, I'd rather appraisers be thorough & honest with values.

[sailorgray]

Feb 5, 2013 9:32:02 GMT -5 lb2006 said:

We sold our house in October 2011. We purchased it in May 2008. We opted to have our house appraised prior to listing it so we'd have a ballpark idea of how much $$ we'd need to bring to the table. It appraised for $75k less than we paid right before the housing market crash. We also didn't HAVE to sell our house, but wanted to try.

We lucked out & had a cash buyer who just sold their $1mil house and didn't care what our house value was - they just wanted a quick close.

For our most recent house, we felt we had a fair appraisal, as we ran all of the comps prior to purchasing. I think appraisers are being VERY careful now, which is great. Even when the numbers don't reflect what we'd prefer to see, I'd rather appraisers be thorough & honest with values.

Well, of course. I think we can all agree with the bolded. I have been hearing a lot of stories lately about appraisers not even leaving their office to do the job. They rely on Google maps and what they see as comps from looking online. So, they are being the opposite of thorough. I am not sure if I remember correctly, but I THINK Mrs.J said that her appraiser saw that her new house had a parking lot, so just assumed it was commercial (Mrs.J, correct me if I am wrong).  It stinks that so much power is given to people who may not be even doing their job correctly.

[lb2006]

I didn't say all appraisers were perfect, but we lucked out personally with very thorough ones. Our appraiser we hired for selling our house spent an hour or so at our house taking photos & measuring. I was confident in his assessment once we also compared numbers, even though it wasn't great for us on selling.

With buying our current home, we found mistakes in the appraisal that the appraiser (hired by seller - home was in an estate) had made. We contested it & had another appraiser hired. It made a $30k difference in the appraised value. I would ask for another appraisal, & give your concerns with the comps, listed above.

[simpsongal]

We had two separate appraisals last year (6 weeks apart) - their numbers came in within $5K of one another. So pretty accurate. They did a thorough walk through, took lots of pictures, and pulled goods comps. But we don't have foreclosures or short sales in the area, that may be a source of low appraisals.

I'm sorry, adlove. I hope you can challenge the appraisal or work through the situation some how.

[sailorgray]

Feb 5, 2013 10:04:10 GMT -5 lb2006 said:

I didn't say all appraisers were perfect, but we lucked out personally with very thorough ones. Our appraiser we hired for selling our house spent an hour or so at our house taking photos & measuring. I was confident in his assessment once we also compared numbers, even though it wasn't great for us on selling.

With buying our current home, we found mistakes in the appraisal that the appraiser (hired by seller - home was in an estate) had made. We contested it & had another appraiser hired. It made a $30k difference in the appraised value. I would ask for another appraisal, & give your concerns with the comps, listed above.

I wonder how we can make sure to  get one of the "good" ones. I do worry when we do eventually sell and have an appraisal done that we will get one who doesn't actually do their job. It's so frustrating. 

[adlove]

Well, I totally agree that the problem lies in this guy just doing the appraisal from his office. Our realtor sent him the comps he used and the appraiser did consider some, and disagreed with others. 

The main issue is that this house is in a very desirable, walkable area, good school district, etc. A very similar house a mere three blocks away is in a much less desirable location, due to neighboring homes, etc etc. It's just not a fair comp. We've got everyone on our side trying to make this right. Like I said, I do think the home is overpriced, as far as price per square foot, and it's on a small lot. So I was expecting the appraisal to come in a bit low, but it was a total kick in the gut when we got it back.

Not one person would be able to find any house on the market in this small area at the price he is quoting. So, our mortgage lender has been great, the only issue we are having is getting a hold of the seller's agent to provide the purchase price of the two other homes which in everyones' opinions are the only true comps. 

If they are selling for much lower, we feel the sellers would be willing to come down. I just am not willing to pay the full purchase price if this appraisal really does hold some weight (which I think it does, it just shouldn't be quite so low). 

Thanks for all your responses, I'm still thinking all is not lost, but we're obviously going to do what we need to do. 

I'll keep you guys updated when we hear something.

[lemondrop]

Feb 5, 2013 9:15:30 GMT -5 IIOY said:

I feel as though I constantly hear stories about lousy appraisals. General question: is there a way to ensure that you receive a fair and accurate appraisal? Or is this just part of the game?

I think it is just part of the game. If you're getting a mortgage/refi, then the lender picks the appraiser. I'm not sure if that's a regulatory rule or just a standard of practice so that a buyer/seller/refi-er can't choose someone who knows them and would then jack up the price and vice versa that the lender won't overinflate the value of the home.

Most appraisals are just going to suck. Appraisal rules have changed so much since the bubble burst. DH and I have this discussion all the time. We agree that some of the changes were needed to stop overinflating the values of homes, but at the same time the value of any object is what someone would pay for it. It's just an odd, odd thing and I think the government is probably hurting as many people as they are helping by cracking down on appraisals.

But, if the appraiser isn't using appropriate comps, the buyer/seller/mortgage company need to make a complaint about that. The mortgage company can remove certain apprasers from their approved vendor list if they feel the appraiser doesn't appropriately appraise properties.

[lb2006]

agreed with above. Since we hired ours independently for our own peace of mind, we asked for a referral from our realtor. She warned us that he was very conservative with appraisals, but we thought that would be good, we'd know the low end of where our house value would fall.

And when we saw the red flags with the appraisal of our current house, we notified the realtor immediately. Since this was an estate sell, it was a little different - the court had to have a value of the home before we went under contract. Once we were under contract, our mortgage lender's appraisal was within $2k of the NEW corrected appraisal. The seller went with a different appraisal company for the 2nd one.

[emjacobs]

We didn't have to have an appraisal since we were a cash buy but we did it to see what we were looking at and the comps were awful.
Our house: Brand New, 3 bed, 3 full bath. 2500 sq ft including finished basement, extended 2 car garage. 2 acre property.

Comps:
1980 2 bedroom, 1.5 bath, 1800 sq ft, no basement, no garage. 5 acres.
2001 3 bedroom, 1 + 2 half baths, 2000 sq ft, unfinished basement, no garage. 1 acre.
1920 5 bedroom, 3 bath, 3000 sq ft, no basement, detached 3 car garage, 25 acres.

Really? Check Angie's list and see if there is a better appraiser that you could get.

[adlove]

I think the issue is less about the actual physical houses he is using, and more about the surroundings of the houses he is using. The neighborhood we are looking in is large, but there are more desirable and less desirable blocks and streets and we are agreeing to pay a premium for the location of this particular home.

The appraiser is willing to bend IF what we all provide as legit comps are ones that he agrees with.

We finally heard back from the seller's agent (who is being a real pain, not responsive, hasn't gotten us bits of info that we've been asking for) and he simply provided 4 additional comps that he used to price the three homes when they were listing. About the purchase price of the other two homes under contract he just said "they are under contract for close to list price". Ugh. I mean, how difficult would it be to just provide the numbers??!

[mrs.jacinthe]

Feb 5, 2013 9:52:48 GMT -5 sailorgray said:

Feb 5, 2013 9:32:02 GMT -5 lb2006 said:

We sold our house in October 2011. We purchased it in May 2008. We opted to have our house appraised prior to listing it so we'd have a ballpark idea of how much $$ we'd need to bring to the table. It appraised for $75k less than we paid right before the housing market crash. We also didn't HAVE to sell our house, but wanted to try.

We lucked out & had a cash buyer who just sold their $1mil house and didn't care what our house value was - they just wanted a quick close.

For our most recent house, we felt we had a fair appraisal, as we ran all of the comps prior to purchasing. I think appraisers are being VERY careful now, which is great. Even when the numbers don't reflect what we'd prefer to see, I'd rather appraisers be thorough & honest with values.

Well, of course. I think we can all agree with the bolded. I have been hearing a lot of stories lately about appraisers not even leaving their office to do the job. They rely on Google maps and what they see as comps from looking online. So, they are being the opposite of thorough. I am not sure if I remember correctly, but I THINK Mrs.J said that her appraiser saw that her new house had a parking lot, so just assumed it was commercial (Mrs.J, correct me if I am wrong).  It stinks that so much power is given to people who may not be even doing their job correctly.

You are correct.  He looked on google maps, saw the parking lot and said (this is a direct quote from his email to our mortgage lender) "it is a commercial property in a commercial neighborhood."  Never left his office to make that determination.  FTR, there are some commercial properties nearby - less than 1/2 a mile.  But the direct neighborhood is decidedly residential.  He was just being lazy.

[adlove]

Feb 5, 2013 13:32:37 GMT -5 @buster said:

Who pulled the comps?  The appraisal company or your agent?  My agent always pulls comps and has them readily available for situations like this.

The appraiser pulled comps initially, and our realtor sent him the list he used after we got the appraisal back. He considered some of the same houses but argued a few of the others were either outdated or not truly comparable. 

So now the seller's agent has shown the comps they used to set the list price of the home. We'll see if this convinces the appraiser to raise the value at all. The seller's agent isn't being very cooperative and I'm nervous that it's a sign of whats to come if the seller should be lowering the price a bit. I seems we might just have to walk away.

[mrs.jacinthe]

I'm sorry. I hope it works out for you.

[sjh722]

Feb 5, 2013 11:00:43 GMT -5 lemondrop said:

Feb 5, 2013 9:15:30 GMT -5 IIOY said:

I feel as though I constantly hear stories about lousy appraisals. General question: is there a way to ensure that you receive a fair and accurate appraisal? Or is this just part of the game?

I think it is just part of the game. If you're getting a mortgage/refi, then the lender picks the appraiser. I'm not sure if that's a regulatory rule or just a standard of practice so that a buyer/seller/refi-er can't choose someone who knows them and would then jack up the price and vice versa that the lender won't overinflate the value of the home.

The lender can't even pick the appraiser anymore (except for a few specialized types of loans). They have to go through a third-party to order their appraisals so it's totally luck of the draw. Some appraisers are great and thorough; others, like pp have said, don't even leave their office and try to comp things that aren't comps/are super old sales/were foreclosures/etc.

Unfortunately, there's often not a lot of luck in contesting appraisals - you have to get the bank to agree that the first appraisal was bad AND get the appraiser to admit he/she was wrong on the value in the first place. It's very, very frustrating.