The buyer realistically may need to go with a different lender and then ask the lender to only send an appraiser familiar with your niche area. What was the value of the sales comparison approach in the appraisal? Regarding your value, the key is what the current market is doing. I thought there may have been other reasons why the value should be slightly higher, but I told the investor it was VERY likely there would be an adjustment upward by $5,000 due to a square footage error. I’ll pitch in a few thoughts though. I have an issue where the appraisal value was fine but a time sale adjustment was applied to my comps that sold in December. I found way better comps that look much similar with inside and outside appearance and features at the price of approx $160-$190k. These books can help you optimize your habits, sleep schedule, conversational skills, and more. In 2014 when it appraised for 171k most of the house had not been remodeled. Are there similar sales that justify your home being worth enough to remove PMI? The appraiser wrote that it was almost 100 sq ft smaller. Just recently my appraisal came in extremely low for our home. It is in a rural area, not many appraisers. I'm not talking about an appraisal that doesn't meet your sales price, but a value that is plain and simply legitimately too low. Do you have any insight? That’s the key. Just this week Zillow came out with an article stating the color blue in the bathroom gives an extra $5400 in value (total baloney). Thanks to a real estate market that continues to recover, many U.S. homeowners have been enjoying rising home values.Even so, prospective homebuyers and refinancers may still encounter the obstacle of low appraisals.. Talk to the Listing Agent and ask how they came up with their selling price. If it was not considered, I would ask that the appraiser would consider what the market was willing to pay for such a feature. Unfortunately, few appraisal review committees increase values; they more often adjust … I’m refinancing my home which I just completed a major remodel and addition. I am ashamed to say that I also asked him such delightful interogatives as “do your appraisers always wear shades at all times, snear and conduct themselves as though you are privaleged to have them present? More than 90% of the time, they want the Appraiser to use excessive adjustments or superior sales (gated, etc.) In Harris County, property taxes are based on tax rates set by the various local governments (taxing units) that levy a tax and on the value of the property. Our part of town is so popular (near Whittier College, in the hills), that people basically don’t move. 3. But I wonder if there are other reasons. *Listing fee varies by market, minimums apply, buyer agent commission not included. It is a different ballgame. After all, if the house was worth $140,000 in the beginning, the seller may have listed it at that level, no? We came in high at 140k with full sellers assist from the seller. Despite 2 new bathrooms, 1 new kitchen, new dining/living room & rugs, new windows/doors, new landscape, generator, new burner, new appliances ignored. I meant “to the point” not poignant … bleggh … before coffee posts and newborn brain mom fail. We tend to say things like, “there is a premium for a corner lot”, or “there is a premium for a single story”, or “the court location is always a premium,” etc…. On another note, I’d also like to address an interested party submitting info to the Appraiser. If your lender thinks you should challenge the appraised value, does your lender have better data? However it was the same exact appraiser on both properties and he used 3 of the same comps on both appraisals with major discrepancies. Thanks for reaching out. wrong GLA, year built, features, etc), then the Appraiser may have to re-do the research, Comp selection, Comp inspection, etc. If this guy is paying attention (and actually doing the appraisals himself), this disclosure should have been made. If you don’t like the value an appraiser has determined, the first thing to do is study the appraisal meticulously, said real estate expert Bill Dallas, … Are there other sales to support a higher value though? Before bringing in a heavy hand with the Office of Real Estate Appraisers (or whatever it is called in your state), I would consider reaching out to the appraiser multiple times. The chief appraiser, even after viewing both appraisals doesn’t feel it warrants a 2nd appraisal. If I don’t get a response, is there a state official I can contact. My lender is helping me a little, but I’m more passionate about this than they are. It’s almost always nerve-wracking to buy a house, and it’s especially true when there are appraisal issues. Is it unheard of to prove the appraiser wrong and get a refund so we could go somewhere else and have it correctly done? Subscribe today and get the Oct/Nov issue delivered to your door! If there are only sales in your neighborhood that are smaller, you might find an older sale in your neighborhood that is larger to help show that value is indeed possible at higher levels (if it is) and use other nearby sales that are similar in size too. Sorry to hear about that, Ron. On one hand it’s so hard to say whether you should contest the value or not because I don’t know your market, and I don’t know if the previous appraisal was legit or not. I appreciate it. he appraised it at 395,000. Did you mean bumped up value “to” $500,000 or “by” $500,000? This letter is a formal response to the work performance evaluation you gave me on (DATE), I appreciate your valuable time … I, on the other hand do not want to put down $105,000 on something that’s overvalued. Keep in mind four years ago you may have paid a premium for the property being brand new, and now it’s not brand new. An investor client recently had this happen because the appraiser measured the house as 150-200 square feet smaller than it was. Ask your loan officer if there is any possible assistance for you out there to help you tackle some of the costs instead of asking the seller to cover all of them. It sounds like you have some good questions for the appraiser to answer such as: Why were no 4-bedroom comps used? Being cooperative and helpful with the rebuttal will build goodwill and may help both of you in the end. It’s frustrating to me how 4k can be the deciding factor. The comp that has 1.5 acres only received $36,000 adjustment for the acreage, when this area is $1800 an acre. However, Texas law governs how the process works. They may know about a cash sale that never hit the MLS or can explain that a low-value sale on the record was a result of the owners selling it to their kids. 10 proven strategies for overcoming objections in sales. Or are you in contract around $135K and you were just surprised it came in at that level? ), yet are magically worth less because an appraiser is “reporting the market.”. This is beyond the scope of the original assignment and a waste of the client’s time and Appraiser’s time. I think prepared, poignant, and polite are the best points to make. So its just not a logical appraisal to myself or the bank. This is a strange appraisal. I certainly can understand going outside the subdivision when you have nothing recent nearby, but that doesn’t make sense here. Actually over the past 10 years you can see in the small pockets luxury homes that they were all built but never sold. Through logic and research, I pray that we are able to sway him. Most successful real estate investors want to help others. There could be crucial details in there to help as well. Im in a large coty while the appraiser ia from a small rural town. Part of the mortgage approval process is to have an appraisal completed by a licensed appraiser.. Once the appraisal is completed, the mortgage lender will scrutinize the appraisal He also didn’t adjust the comps for lack of garage. They’ll likely already have their minds made up about comps when they come to appraise my property. Every deal I have been in that had a “bad” appraisal has ended up the same– The appraiser sticking by his appraisal each and every time it was challenged. Ryan, thanks for the quick follow-up! I’m very confused and is it worth fighting at this point since it is an opinion. The buyer’s agent and I have submitted information to the bank and for the appraiser. If you have any other questions, feel free to ask. It’ll be interesting. If the new rules call for recent sales of like homes in the same community how can one sell to start the process and get a decent appraisal? And my house I paid 389000 for it and the VA apprasial came back at 330000 dolkars. Without any repairs made, without the $12,600 adjusted land value the old comp is still higher!! A “flip” shouldn’t be penalized just because it is being sold to make a profit after being rehabbed. 3) Are you positive it was the same appraiser who inspected the property each time? Now in 2016, with the interest rate cut further (in half) we refinanced again, 130,000. First, let’s talk through some tips for putting together a rebuttal. What if the second appraisal is not credible, but higher? They hit me for 3.5% or 7% annualized. Nice article. Provide cost figures to the appraiser, signed permits, etc… so the appraiser has all the details. But it does at least give buyers a shot at a higher appraisal value and a successful VA purchase. You’ve started to plan your luau-themed housewarming party. The 3 comps the appraiser put on the appraisal were strange as well. Anyway, adjustments can happen if they need to, but it is also possible for the appraiser to consider the value of the extra space in the final number selected too instead of making a specific line-item adjustment. The private sale can reinforce value. The cost approach didn’t add up according to our contractor either, I hope the numbers that I provided weren’t confusing. I understand lenders requiring two appraisals because they are the ones lending the money, yet when we throw two value opinions into the mix, it is also plausible that they both fall within a reasonable range of value, and a lender has to make a judgment call as to where the market is at. I think the way you feel is spot on because it’s not realistic to be overly optimistic during this process. His comps were other ranch homes but nothing with acreage, let alone the amenities that we have. It’s surprising to hear of a lack of adjustments. You’ve done all you can to increase the appraisal value of your home and the bank has already approved your credit and income. I.e. Details like that are often missed by even the best appraisers and can impact your home value. PasswordUse at least 8 characters. So when the appraiser went out of the hood for comps and called our Edwardian A contemporary…well I screamed at the guy who trained the kid and asked him why he is sending an obvious newbie to a property that was at least worth a Million (a no no) among other things. I studied the reports and found a couple of mistakes. Thanks for the comment. Regarding tax assessments, some areas of the country have better assessments than others, so it’s hard to say what it is like in your area. The house was a HUD and they did their own appraisal in December. He provides appraisals and valuation consulting for a variety of clients including CPAs, attorneys, investor... Ryan Lundquist is a certified residential real estate appraiser based in Sacramento, CA. I find the information useful however discouraging based on most outcomes. What is usually not mentioned is that an Appraisal is not a fact. Just adding the correct land valuation to the old comp makes the adjusted sales price $290,200. I recently sent an email to an appraiser asking him to reconsider the value he placed on my home. The house is a 2375 sq ft all brick with stone accents 2 story house with vinyl shakes for a craftsmen look. The condition when this property was a foreclosure, had $30,000 estimate damages in plumbing, missing carpet, old tile, broken windows it was C4. That’s unfortunate when that happens – especially if there is a blatant misunderstanding of the market. 2. For some programs, lenders do order more than one appraisal, especially for higher-end properties. Wow, what a crazy situation. The kitchen may not be updated, but perhaps the vinyl windows are new. The next appraisal could very well meet your expectations. All qualified professionals have their opinion on which way to perform their job (within professional standards) is best. When you jump through the bank’s hoops though, they can in turn provide that information to the appraiser. How Appraisals Work. Part of my problem is that half my town is in a flood zone that has had recent flooding and crushed the property values in that section. It is possible that he just lackadaisically just threw down the number 135k because he knew it was clearly worth that, and it would allow us to complete the loan process but didn’t want to look for better comps that would raise the value? Thank you for the comment. If you go east, it’s a comparable neighborhood… If you go south, it’s the same school district but the neighborhood and prices are not as nice. My house however is not in a flood zone and prices in those parts are increasing. However, sometimes as hard as it might be to accept, the value just isn’t there. We are in an area of average or value priced homes. I might suggest selecting properties you think are competitive and make notes on each property on what is similar and not similar. Thanks. Though dependent on the temperature of your local market, the seller typically has the most to gain by challenging the appraisal, but will need to work with you since they can’t interfere with your loan. However, other employers won't threaten … I’m sorry to hear things unfolded that way. We we’re very confused with the adjustment portions, because two of the three comparisons only had 3 bedrooms instead of 4 like our plan, as well as one of the houses not even having a basement where our house will have a 1636 sq ft. full basement. Hi Eric. Work is hectic and it's very rare for staff to have the time to discuss issues on a one-to-one basis that is not part of a disciplinary process. It should be supported and the story the appraisal tells should make sense to the reader – and draw the reader to understand the conclusion. This seems sketchy to me. (That’s the big one that I don’t understand why it wasn’t included in the comps since its a few houses down from ours. ) Hopefully the “comps” your agent pulled really are competitive. Square footage can matter, so if the appraiser is off, that could change the value. A bad appraiser often does a few things that I noticed in my experience: a) they assume that the value they adjusted for is absolute and not a point on a range of values….values that are all justified on a scale (superior, inferior, etc) depending on things that are not absolutely “knowable…” things like the value of an amenity, location, etc…which can vary and which the comps will show you if youhave good comps! Enjoy your day Ryan. However he appraisal came back low with the 3 comps being used coming from a. Performance Appraisal. A rebuttal letter is a formally written communique that expresses the ideas, arguments, and the terms of a rebuttal. the only similar one was listed at $171k. How can one community reinventing itself ever get out of this vicious cycle? Our appraiser glibly informed us we needed smoke detectors in the living, and near the kitchen. Really listen to the objection - You might think jumping in with a quick response is the best tactic, but it’s much better to listen carefully to what they … The tax assessed value has been consistently around 175k for the past 4 years. *Quality of Construction Adjustment + $57,600 + $43,200 I would also be interested to see what type of a percentage difference there has been historically between typical subdivision houses and your community. Study your employee handbook to know your rights when it comes to dealing with written reprimands. Wow Darrell, that was quite a response. That is probably going to carry more weight than anything with a lender. The other main approach that is commonly used is called the sales comparison approach. In other words, does the dollar amount represent the way buyers behave? The back of the house will have a 12×20 deck, and covered a smaller covered front porch. If the comps were not on acreage, that sounds a bit strange. I do know appraisers who travel quite far since they are located in rural areas, so it’s possible to be competent. I think you’re right about most “challenges” in that the lender provides a list of 10 sales and says, “why didn’t you use these?” I had this happen last week actually. Everyone we have talked to said we got a steal on this house since we spent 6 months trying to buy something that was just in livable condition under 175k was hard to come across. Check your home inspection report. As an Appraiser, I’ve strongly encouraged my clients to ignore an appraisal challenge unless the challenger includes detailed explanation(s) identifying why the appraisal should be challenged. We recently received an appraisal for a refinance. Even if values cooled off or changed somehow, it is shocking that these adjustments were not given before and now they have been given. We are dealing with this right now in Houston, TX. Thankfully the on-duty doctor was able to inject some Benadryl in my system to stop the allergic reaction. How to Write a Rebuttal Letter to Your Employer. This post will be a great complement to our podcast tomorrow, which will be featuring Ryan. Thank you so much for your time, so sorry this is lengthy, I have read some of the comments above and i know you have said it is up to discretion of the appraiser but I mainly want to know if I have a good argument with the situation given. this kid did not want to reconsider. We received the $1800 adjustment on every other comp. It’s very suspect that adjustments were significantly different, and that doesn’t look good for the appraiser at all. As a seller, if you think your home is worth $300,000 and the appraiser says $290,000, both you and your buyer could have a problem. c) Bad appraisers are also often emotionally immature and let ego dictate that the value he/she chose has to be right…Sound familiar to some of your horror stories? Granted, the home owner will clearly be impacted by the bank’s decision, but fundamentally the appraisal still belongs to the bank because the bank is the one who established a client relationship with the appraiser. Also, print out a map of the area. I am currently going through this issue with a home I am trying to sell. Anything you’d add or any stories to share on successful appraisal rebuttals? Hang in there. AVMs analyze public record data, comparable homes, and other databases to provide an estimate price of the home. We just found out today it will not be moving forward, we did not receive an explanation, although we will be asking for it. Joyce. I hope this was helpful. Fortunately, I think I did most of what you are suggesting, and was able to point out several mistakes- ultimately, they only accepted one major clerical error (appraiser did not know the house had central air and heat- this mistake was actually on the original appraisal as well) and it brought the value within $900 of the contract price. This might help the appraiser understand how you see the market. I hope so. He did disclose that he had done the appraisal in December, however I don’t think he thought we would have the actual appraisal on hand. 1. I’m willing to go to the house and measure and calculate it my self but was wondering if that would stand as proof for an inaccurate appraisal. I have seen some investor clients have success with their rebuttals, but at the same time some appraisers are unwilling to really consider new information that may be accurate. What was the condition like on the other units? I have found comps much closer (even .1 mile away) that support a much higher value. Do the larger units tend to sell for more usually? The comps are not the issue, they are all over $300k, except one which is $257k (it only sits on 1.5 acres while we have 48 acres). There can definitely be a sense of powerlessness when that happens. It’s always hard to give value advice without knowing more details. Hi Rachel. Did they sell for more or not? I understand it sounding sketchy for the appraiser to say he cannot talk to you about the value, but it’s actually the truth. Unfortunately though, employers occasionally use … I’d like to congratulate you on the appraisal challenge form. Another reason for appraisals is to discuss career plans. I was told the stats they use cannot be broken down by sections of my town. Crossing my fingers! Thank you for the helpful article. My guess is the bank has a form you can fill out or at least data you can provide them along with their form or whatever mechanism they might have. Just make sure you know what you are doing when it comes to measuring though. OLD: $0 for site, +57,600 for basement/rooms, Net Adjustment +14680 with no land value That’s not an easy situation to be in. Start analyzing real estate properties, we do the math for you. He did disclose that he had done the appraisal in December, however I don’t think he thought we would have the actual appraisal on hand. There are areas in the United States that have seen massive appreciation since 4 years ago (like my market in Sacramento), though there are places that have definitely not seen that same trend. There are always so many factors to consider, which always makes it interesting. This is very helpful. I hope it works out in the end. If a house backs a park/common area and then a major road, there may not be enough market data to make such an adjustment. Corner units also have more bedrooms, bathrooms, and overall square footage. Are there similar sales and similar listings that support a much higher value than $395,000? owned HUD home that is in excellent condition that needs no repairs. 2. I have heard of adjustments like that, though it’s impossible to say whether they are legit or not in your case. Many markets tend to cool off during colder months. Can I Legally Decline Signing a Performance Appraisal?. However, sometimes as hard as it might be to accept, the value just isn’t there. The appraise used “builder cost estimates and appraisal files” for information and the numbers were: $24,000 opinion of site value(which is what we paid for the land), 2375 sq ft @ $95 per ft=$225,625, basement 1636 sq ft @$15 per ft=$24,540, garage 606 sq ft @ $20 per ft=$12,120, *As is value of site improvements(which were told is well, septic, permits, lot clearing, etc=$20,000. There are only two appraisers in that area, even if we get a second appraisal I am not sure we will be able to get a fair one. The buyer’s really really want this house as there is nothing like it on the market. Were these comps you mention sold on MLS? That will be critical. Case in point. Knowing your team too, I think it’s a smart move for you to meet the appraiser at the inspection to be proactive instead of reactive. It really depends on the lender and appraiser involved. Since I am only borrowing $50,000 the lender has no issues loaning me the $50,000in despite of the lower appraisal. Hi Jesse. Remember it can be hit and miss when challenging an appraised value depending on the situation, the appraiser, and the lender. the house is a govt. If you signed up for BiggerPockets via Facebook, you can log in with just one click! because…..my opinion about value is in a sense, an opinion about the range of values justified by my appraisal. General Tips for Crafting a Rebuttal Letter. My point here is that a good appraiser should have no problem reconsidering a change of value IF this value can be justified in the comparables & research. The lender has a chief appraiser, that looks over the appraisal and decides to forward it on the the appraiser for review/inclusion. Your advise is greatly appreciated. Thanks for sharing. Still, your rebuttal may not ultimately be accepted by the bank, requiring that you either make up the difference or negotiate with the seller on price. Many companies allow employees to submit a rebuttal … The diversity of sales does provide a range of values in most cases, though since the appraiser needs to select one point of value, there should be a good reason why value is reconciled to say $270K or $280K or whatever.