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Appraisal disagreement??

Old 07-10-2013, 04:10 PM
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Default Appraisal disagreement??

Refinancing a property I own. I was hoping to pull some cash out to do some major upgrades. When I started I had a local Realtor give me 6 comps to my property. The bank sent their own appraiser out, I understand why. His appraisal was about $35K less than the Realtors. I know that is not much difference. The difference in amounts is what I needed for the improvements.

But the appraiser had my property roof as being 14 years old even though I just put a new $10k roof on it 6 months ago, with permits. How could he miss that? Also the comps are no where close to apples to apples. I had the Realtor look at the appraisal and me could not believe the comps this guy used. I hate to request a second appraisal for $700 that I just paid for. Any advice?
Old 07-10-2013, 04:51 PM
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Originally Posted by mikeloew View Post
Refinancing a property I own. I was hoping to pull some cash out to do some major upgrades. When I started I had a local Realtor give me 6 comps to my property. The bank sent their own appraiser out, I understand why. His appraisal was about $35K less than the Realtors. I know that is not much difference. The difference in amounts is what I needed for the improvements.

But the appraiser had my property roof as being 14 years old even though I just put a new $10k roof on it 6 months ago, with permits. How could he miss that? Also the comps are no where close to apples to apples. I had the Realtor look at the appraisal and me could not believe the comps this guy used. I hate to request a second appraisal for $700 that I just paid for. Any advice?
Call the lender - send them a detailed breakdown of your concerns and the RE Brokers appraisal .... May help a bit
Old 07-10-2013, 05:09 PM
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Thanks Triplenet, I was thinking of calling the appraiser at first. My loan officer told me she could not call the appraiser herself, it would have to be a third party. I guess its the new rules. But they do have a third party. I budgeted about $70K for the improvements. I have saved $35K cash. I am only locked in to the low interest rates till the end of the month, so I have to move fast.
Old 07-10-2013, 05:11 PM
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they are wrong and you can prove it no sweat
Old 07-10-2013, 05:20 PM
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Originally Posted by mikeloew View Post
Refinancing a property I own. I was hoping to pull some cash out to do some major upgrades. When I started I had a local Realtor give me 6 comps to my property. The bank sent their own appraiser out, I understand why. His appraisal was about $35K less than the Realtors. I know that is not much difference. The difference in amounts is what I needed for the improvements.

But the appraiser had my property roof as being 14 years old even though I just put a new $10k roof on it 6 months ago, with permits. How could he miss that? Also the comps are no where close to apples to apples. I had the Realtor look at the appraisal and me could not believe the comps this guy used. I hate to request a second appraisal for $700 that I just paid for. Any advice?

Are you sure it was the banks own appraiser? Not sure that is the way things are done anymore.

I believe they can have an affiliated owned source come out however a 3rd party exclusively monitors the appraisers appraisal.

I refinanced earlier this year and had somewhat the same thing happen although I was not doing a cash out.

Noticed the comps the appraiser used were for homes miles away from my sub since there were no recent sales in the sub and it is made up of less than 30 homes.

Anyway 5 out of the 6 homes that were used were foreclosure sales which struck me odd. There was no issue with LTV since I have been in the home for 10 years however I called the appraiser who told me I could not call them and instead had to call my mortgage rep and he explained how it worked and it was final.

I called the city and spoke to the assessor and he told me there policy was that they do not use foreclosures when assessing - go figure.
Old 07-10-2013, 05:27 PM
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Originally Posted by magua View Post
Are you sure it was the banks own appraiser? Not sure that is the way things are done anymore.

I believe they can have an affiliated owned source come out however a 3rd party exclusively monitors the appraisers appraisal.

I refinanced earlier this year and had somewhat the same thing happen although I was not doing a cash out.

Noticed the comps the appraiser used were for homes miles away from my sub since there were no recent sales in the sub and it is made up of less than 30 homes.

Anyway 5 out of the 6 homes that were used were foreclosure sales which struck me odd. There was no issue with LTV since I have been in the home for 10 years however I called the appraiser who told me I could not call them and instead had to call my mortgage rep and he explained how it worked and it was final.

I called the city and spoke to the assessor and he told me there policy was that they do not use foreclosures when assessing - go figure.
Sorry not the banks appraiser, but the appraisal company the bank picked. You can not pick your appraiser any longer, the bank is kind enough to do that for you. So what that means is the bank hires an out of town appraiser that does not have local knowledge.
Old 07-10-2013, 05:54 PM
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I'm an appraiser. The appraiser can't discuss the appraisal with you due to client confidentiality laws. Your loan officer is also correct that they really can't call the appraiser anymore either. There are rules which require the separation between appraisers and commissioned loan officers. There are plenty of times where I wish I could have a conversation with the borrower, but I really can't. Now if a borrower calls me and asks general questions, I can answer them...assuming they are being nice. If a borrower calls and screams and yells, "click".

As far as the roof, did they actually state the age of the roof? Generally I will ask if there has been any recent updating. This is when I need to know about the new roof, the interior paint last year, etc.

But.... A new roof is not going to make 35K worth of difference in my market. It's probably not going to make a big difference in your market either, usually the cost to repair/replace plus a little extra for having to deal with it.

As far as the value your agent put on the property, that can go either way. I regularly deal with agents that wonder why I didn't use that oceanfront sale when the subject is not oceanfront. I've had them suggest comps that were 1000SF larger. Agents by definition are interested parties while appraisers have to be disinterested.

I'd be interested to know who the lender is. If you are using a big bank such as BOA or Chase, etc. The bigger banks use appraisal management companies, (AMCs). Some AMCs are better than others. Generally the bigger banks use the worst AMCs. For example, some Suntrust work goes through India. They will call around looking for the cheapest appraiser. They send me offers for work that is 400 miles away so they don't care about quality. The better banks use an in-house ordering system. Most of my better clients pay my fee and order direct because they care about appraisal quality. If you are using Chase, good luck finding a good appraiser. Chase just screwed hundreds of appraisers out of their fees, so they are having a hard time finding appraisers to begin with.

Was the appraiser local? If they were coming from 100 miles away, they might not be competent, although they might be.

There is a process for contesting the appraisal. You have to provide better comparables to the bank and have them send them to the appraiser. Keep in mind, they have to be better comparables. Most of the time this happens to me, they aren't better comparables. For example-If the sale you send the appraiser is 1000SF larger and sold for $35,000 more, the size adjustment is going to bring the adjusted price right back down. If your sales are nearly a year old, it's not going to help.

Was this an interior appraisal? Did the appraiser come out and walk through the house? If so, check the measurements. Did they get the square footage right? Did they get the bedroom/bathroom count right?

If this was an exterior "drive-by" appraisal then we have to use the data we have available. This would be public records, old MLS listings, etc.

Also, the market just hasn't recovered in many areas. I think I made people upset with every appraisal I did last week. One guy thought his house was still worth a million bucks. It probably was worth that in 2006. Now it's worth about 600k.

Feel free to PM me if you have any questions.
Old 07-10-2013, 05:58 PM
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It is the bank's decision which appraiser to select, and their decision if they want to accept the appraiser's opinion or not. Your real estate guy has an opinion, the appraiser has an opinion, and now the bank has their opinion. We can give you some more opinions, but it probably will not matter to the bank who ultimately makes the call.
Old 07-10-2013, 06:01 PM
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appraiser = real value
Realtor = percivered value or what they think its worth

After all the screw-ups in the past how can you blame the bank? You want a 100% loan and you wonder why they say no?
Old 07-10-2013, 06:01 PM
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Originally Posted by magua View Post
Anyway 5 out of the 6 homes that were used were foreclosure sales which struck me odd. There was no issue with LTV since I have been in the home for 10 years however I called the appraiser who told me I could not call them and instead had to call my mortgage rep and he explained how it worked and it was final.

I called the city and spoke to the assessor and he told me there policy was that they do not use foreclosures when assessing - go figure.

Assessors perform a different function. They are looking at taxable value which is slightly different from current market value.

For a bank appraisal, if bank owned sales are dominating the current market, we need to use bank sales. If I was going to buy a house and had my choice of 3 comparable homes:
House 1:$50,000. Not bank owned and in good condition.
House 2: $35,000-bank owned and needs $5,000 in repairs.
House 3: $30,000-bank owned and needs $10,000 in repairs.

Which one are you going to buy? I'm probably not buying house 1.

You can thank the too big to (jail)fail banks for that mess.

Did you know that when I do an appraisal for Fannie Mae, they want me to give them a price to sell the house in 90 days? If the typical marketing time is 6 months, then I'm coming up with a price below current market value. The Fannie Mae homes are going to be the cheapest, and offer much better financing terms than most other homes. I can buy a Fannie Mae home for 3-5% down if I want to live in it. Bank of America won't even think about a mortgage for less than 20% down. FHA will do 3-5% down but that can be a pain.
Old 07-10-2013, 06:14 PM
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Originally Posted by mikeloew View Post
Refinancing a property I own. I was hoping to pull some cash out to do some major upgrades. When I started I had a local Realtor give me 6 comps to my property. The bank sent their own appraiser out, I understand why. His appraisal was about $35K less than the Realtors. I know that is not much difference. The difference in amounts is what I needed for the improvements.

But the appraiser had my property roof as being 14 years old even though I just put a new $10k roof on it 6 months ago, with permits. How could he miss that? Also the comps are no where close to apples to apples. I had the Realtor look at the appraisal and me could not believe the comps this guy used. I hate to request a second appraisal for $700 that I just paid for. Any advice?
This was a slippery slope even before the housing bubble burst.

Typically appraisers value a property based on their opinion and perhaps how much they are paid. Assessors? They use a computerized mass appraisal system that takes into account a gazillion factors and assesses a property relative to other homes in the community. A realtor? They cling to whatever produces the highest value.

Banks are still a little gun shy on valuations so I don't think you'll get anywhere if you fight them. Too much volatility.

That might be a blessing in disguise. Most of us need a better LTV.
Old 07-10-2013, 06:18 PM
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Originally Posted by Qb1rdman View Post

Typically appraisers value a property based on their opinion and perhaps how much they are paid.
Really? Do you really think I'm going to give more value to a property because I got an extra $100 in my appraisal fee?

This is the stupidest thing I've seen on THT since the Rav4 thread.
Old 07-10-2013, 06:26 PM
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Originally Posted by JRS@OBX View Post
I'm an appraiser. The appraiser can't discuss the appraisal with you due to client confidentiality laws. Your loan officer is also correct that they really can't call the appraiser anymore either. There are rules which require the separation between appraisers and commissioned loan officers. There are plenty of times where I wish I could have a conversation with the borrower, but I really can't. Now if a borrower calls me and asks general questions, I can answer them...assuming they are being nice. If a borrower calls and screams and yells, "click".

As far as the roof, did they actually state the age of the roof? Generally I will ask if there has been any recent updating. This is when I need to know about the new roof, the interior paint last year, etc.

But.... A new roof is not going to make 35K worth of difference in my market. It's probably not going to make a big difference in your market either, usually the cost to repair/replace plus a little extra for having to deal with it.

As far as the value your agent put on the property, that can go either way. I regularly deal with agents that wonder why I didn't use that oceanfront sale when the subject is not oceanfront. I've had them suggest comps that were 1000SF larger. Agents by definition are interested parties while appraisers have to be disinterested.

I'd be interested to know who the lender is. If you are using a big bank such as BOA or Chase, etc. The bigger banks use appraisal management companies, (AMCs). Some AMCs are better than others. Generally the bigger banks use the worst AMCs. For example, some Suntrust work goes through India. They will call around looking for the cheapest appraiser. They send me offers for work that is 400 miles away so they don't care about quality. The better banks use an in-house ordering system. Most of my better clients pay my fee and order direct because they care about appraisal quality. If you are using Chase, good luck finding a good appraiser. Chase just screwed hundreds of appraisers out of their fees, so they are having a hard time finding appraisers to begin with.

Was the appraiser local? If they were coming from 100 miles away, they might not be competent, although they might be.

There is a process for contesting the appraisal. You have to provide better comparables to the bank and have them send them to the appraiser. Keep in mind, they have to be better comparables. Most of the time this happens to me, they aren't better comparables. For example-If the sale you send the appraiser is 1000SF larger and sold for $35,000 more, the size adjustment is going to bring the adjusted price right back down. If your sales are nearly a year old, it's not going to help.

Was this an interior appraisal? Did the appraiser come out and walk through the house? If so, check the measurements. Did they get the square footage right? Did they get the bedroom/bathroom count right?

If this was an exterior "drive-by" appraisal then we have to use the data we have available. This would be public records, old MLS listings, etc.

Also, the market just hasn't recovered in many areas. I think I made people upset with every appraisal I did last week. One guy thought his house was still worth a million bucks. It probably was worth that in 2006. Now it's worth about 600k.

Feel free to PM me if you have any questions.
Thanks I was hoping an appraiser would reply. The appraiser is from out of town, 75 miles away and he did go through the property. His square footage does not agree with tax man, or my original MLS listing, but only by 120SF, so I don't have a problem with that. But two of his comps were almost a year old. Also one comp was only 2 bedroom verses 3 bedroom. The other 4 comps were any where from 300-500 SF smaller than mine, and yes he did say he adjusted for that, but why not pick comps that are as close to possible when they are available? My Realtor just told me that there are many very similar homes, why he chose the ones he did is a mystery. The Bank is Wells Fargo. And I paid them in full for the appraisal before closing. Thanks Mike.
Old 07-10-2013, 06:32 PM
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Originally Posted by JRS@OBX View Post
Assessors perform a different function. They are looking at taxable value which is slightly different from current market value.

For a bank appraisal, if bank owned sales are dominating the current market, we need to use bank sales. If I was going to buy a house and had my choice of 3 comparable homes:
House 1:$50,000. Not bank owned and in good condition.
House 2: $35,000-bank owned and needs $5,000 in repairs.
House 3: $30,000-bank owned and needs $10,000 in repairs.

Which one are you going to buy? I'm probably not buying house 1.

You can thank the too big to (jail)fail banks for that mess.

Did you know that when I do an appraisal for Fannie Mae, they want me to give them a price to sell the house in 90 days? If the typical marketing time is 6 months, then I'm coming up with a price below current market value. The Fannie Mae homes are going to be the cheapest, and offer much better financing terms than most other homes. I can buy a Fannie Mae home for 3-5% down if I want to live in it. Bank of America won't even think about a mortgage for less than 20% down. FHA will do 3-5% down but that can be a pain.
Thanks for the clarification. I m sure if I was able to talk to the appraiser he may have had a similar explanation. However my mortgage guy was not to helpful regarding those details or perhaps not allowed to discuss.

These ahats - lenders really hosed the homeowners doing the right thing with this effing mess.
Old 07-10-2013, 08:18 PM
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Originally Posted by mikeloew View Post
Thanks I was hoping an appraiser would reply. The appraiser is from out of town, 75 miles away and he did go through the property. His square footage does not agree with tax man, or my original MLS listing, but only by 120SF, so I don't have a problem with that. But two of his comps were almost a year old. Also one comp was only 2 bedroom verses 3 bedroom. The other 4 comps were any where from 300-500 SF smaller than mine, and yes he did say he adjusted for that, but why not pick comps that are as close to possible when they are available? My Realtor just told me that there are many very similar homes, why he chose the ones he did is a mystery. The Bank is Wells Fargo. And I paid them in full for the appraisal before closing. Thanks Mike.
Hmmm... Wells Fargo. That explains a lot. Find another lender.

They own their own Appraisal Management Company (AMC) names RELS. I refused to work for RELS when they wouldn't pay the local fee. Why should they pay for a local expert that only covers this county when they can pay half price for the guy that covers half the state. You get what you paid for.

Just so you know, I'd be really surprised if that appraiser got half of the appraisal fee you paid.

Ask your realtor to see if this guy is a member of the MLS.

Find another lender. Stay away from the big guys. Any local bank or credit union will have access to the same rates and terms as WF.

As far as the square footage not agreeing with the MLS or the tax man, that is typical. The tax records aren't accurate in my county. They are generally close, but not always. Most of the real estate agents don't measure either, they use tax records or eyeball it.

Sounds like you need to get your realtor to pull several comps and submit them to they bank as a reconsideration of value. Find the most similar in ago, size and bedroom count.

The appraiser will probably discredit them all, we like to do that. We are a highly stubborn bunch. But... If they are good comps, somebody at the AMC might decide to have his report reviewed or order another one.

Then find another lender!
Old 07-10-2013, 08:20 PM
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Originally Posted by magua View Post
These ahats - lenders really hosed the homeowners doing the right thing with this effing mess.
You got that right.

You know...the banks that had the biggest losses all used appraisal management companies.

Coincidence? If you lend money, do you really want to go cheap on valuing your collateral?
Old 07-10-2013, 08:36 PM
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Originally Posted by JRS@OBX View Post
Really? Do you really think I'm going to give more value to a property because I got an extra $100 in my appraisal fee?

This is the stupidest thing I've seen on THT since the Rav4 thread.
I don't think he meant because you get an extra $100. I think he means you won't spend as much time on it if you're getting paid less. I got a 2d mortgage a few years ago. Wanted 8000 for some improvemenets. Appraisal came in about 30 less than I thought it should. Called the bank. Told them my concerns. They looked at the appraisal. Voila. It did not include the pool, the 1500 sq ft deck and pergola, the $8000 garden shed, $20000 in landscaping, hardwood floors, granite counters, widened driveway, or garage decked out with cabinets, shelving units etc. Turns out, all he did was pull comps and do a drive-by. They sent him back out and he added 45 to the appraisal.
Old 07-10-2013, 09:16 PM
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Originally Posted by Tx49 View Post
I don't think he meant because you get an extra $100. I think he means you won't spend as much time on it if you're getting paid less. I got a 2d mortgage a few years ago. Wanted 8000 for some improvemenets. Appraisal came in about 30 less than I thought it should. Called the bank. Told them my concerns. They looked at the appraisal. Voila. It did not include the pool, the 1500 sq ft deck and pergola, the $8000 garden shed, $20000 in landscaping, hardwood floors, granite counters, widened driveway, or garage decked out with cabinets, shelving units etc. Turns out, all he did was pull comps and do a drive-by. They sent him back out and he added 45 to the appraisal.
This wasn't the appraiser's fault - he only did what he was hired to do. Your bank has decided to take the cheap route and only use "drive by" appraisals for 2nd mortgage loans. How could he see your pool in the backyard from the street? Or your deck or pergola? Unless he has X-ray vision, he had no idea you had hardwood, granite counters, or cabinets in the garage. All he had to go on was public records most likely.

This was not the appraiser's fault, but instead your bank's fault for not ordering a full appraisal to start with. Once he was able to make a full interior and exterior inspection, it sounds like he nailed the value. Even after losing billions of dollars during the housing market crash, the banks are already back to the same cheapskate BS that got them there in the first place - NOT KNOWING WHAT THEIR COLLATERAL IS WORTH ON THE LOANS THEY MAKE. Again, not always the fault of the appraisers...

And if you can't tell, I'm an appraiser also. Thank God I don't appraise single family homes, although the commercial lenders are getting to be almost as bad as the residential lenders when it comes to ordering the cheapest appraiser out there.
Old 07-11-2013, 02:27 PM
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Originally Posted by Marlin308 View Post

And if you can't tell, I'm an appraiser also.
Poor bastard.
Old 07-11-2013, 03:34 PM
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Just curious, are these 'comps' your realtor has given you still active (for sale) or have they actually sold? Realtors love to give me active listings and think it means something. And yes, I'm an appraiser too.

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