Got Screwed on House Appraisal

[BTLowry]

I would tell buyer to find new lender, get a better appraisal or find a different house

No way I would give up that much on a sale with the facts you gave

Have had 2 appraisals on 2 different properties done in last 5 years

1st one I think sat at the road, took a couple of pics, found some comps and came in at exactly what I was paying. Pretty sure they knew what I was paying and just agreed it was a good price
2nd place had a 54 page appraisal and came in at 10% over what I was paying, which is more what I was thinking the place was worth

Bottom line is there are people in every type of job that give there best and some that barely put any effort into their work but somehow stay employed

[Miller]

Im guessing you have access to getting comps somehow?

Usually an appraiser wants the comps from the last 6 months to avoid an underwriter throwing them out.

This link sums up some good ideas.

http://www.interest.com/mortgage/news/4-smart-moves-to-challenge-a-home-appraisal/

If you don’t want to start over with a new buyer then I would negotiate if needed. You can’t blame a buyer for being hesitant to buy something that doesn’t appraise. That said meeting halfway sure works a lot in Real Estate...

[Wits_End]

Im highly suspicious of fraudulent activity between the buyer, lender and appraiser. The appraisal was grossly incorrect in almost every aspect of it, starting with incorrect gross living area and highly contrasting comps used. The buyers attitude went from begging me to accept his offer to "take the amended price or we are done". Somehow the appraisal, with being so grossly wrong, came in just a few thousand over loan amount, giving the buyer what he thought was the position to negotiate it lower. The appraisal didnt meet lender requirements and therefore he could walk away with earnest money. I told him not a dime less. Fishy in every aspect of it, but no way to prove it. Hopefully the protest actually happens and values meet requirements, but that is dependent on buyer cooperating.



Do you really think the thoughts of a sellers realtor would be considered over a licensed appraiser in the eyes of the buyer's lender?

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[Wits_End]

Im guessing you have access to getting comps somehow?

Usually an appraiser wants the comps from the last 6 months to avoid an underwriter throwing them out.

This link sums up some good ideas.

http://www.interest.com/mortgage/news/4-smart-moves-to-challenge-a-home-appraisal/

If you don’t want to start over with a new buyer then I would negotiate if needed. You can’t blame a buyer for being hesitant to buy something that doesn’t appraise. That said meeting halfway sure works a lot in Real Estate...

I've gone through a very fair comp search and the adjusted amount is $36k over his. Even if I'm off $16k, that's a huge difference.

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[pervis]

I went thru a similar deal on my refi a few months back. Appraiser came. Was here maybe 20mins and left. Got the appraisal back and it came in 20k lower than what we were thinking. I have a nice smaller home. So we looked at the appraisers comps he was using houses miles away and all were lower than mine. He even used a condemned property as a comp. I like to of lost it. The lender said they had never seen such a bad appraisal and would still offer the same everything that we already agreed on.

[Hoggslayer]

Every house I've ever bought came in short. Lenders trick to get the buyer to put more skin in the game. Usually ends up running you 3k to 5k more at closing.

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[jaime1982]

I went thru a similar deal on my refi a few months back. Appraiser came. Was here maybe 20mins and left. Got the appraisal back and it came in 20k lower than what we were thinking. I have a nice smaller home. So we looked at the appraisers comps he was using houses miles away and all were lower than mine. He even used a condemned property as a comp. I like to of lost it. The lender said they had never seen such a bad appraisal and would still offer the same everything that we already agreed on.

Same happened to us on refi a few years ago. He came out very low and we didnt move on the refi. We just refid this year to 15 year loan in febuary and our appraisal was no BS about 50k higher than the one a few years ago.
insane

[texansfan]

Just got an appraisal back for a house sell and its $25,000 lower than contract price when the expected amount was $10,000 over. 2800sqft home with contract price at $300k. A very conservative comparison shows it above $320k.


The gross living area was off 173sqft or about 7%. It was only corrected after a heated conversation.
The appraiser grabbed homes that were 10 years older and highly contrasting in build style and in a different neighborhood with clear differentiation in home values, on average $65,000 lower in value.
The appraiser used Lot size adjustment of $0.85/sqft when lots are selling for $9/sqft very near property. The county appraises it at $5/sqft.
The appraiser used Gross Living Area adjustment of $10/sqft, which seems incredibly low, expected to be $40/sqft for adjustments.
The appraiser picked a house as a comparable that spent 3x the normal time on market and stated foundation damage in the listing, no adjustments were made for that.
No adjustments for 3 bath vs their chosen comps which had 2.

I'm not an appraisal expert but these adjustment numbers are less than 50% of appraisals done 9 years ago.

Anything I can do besides a complaint? Protest is my only option in keeping house sell alive.

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What did your CAD say about your taxes?
Did they have it lower or higher than the amount you hoped it'd appraise for?

[Wits_End]

CAD says $296k, $10k over appraiser, but not sure this carries much weight in anything.

[Miller]

Im highly suspicious of fraudulent activity between the buyer, lender and appraiser. The appraisal was grossly incorrect in almost every aspect of it, starting with incorrect gross living area and highly contrasting comps used. The buyers attitude went from begging me to accept his offer to "take the amended price or we are done". Somehow the appraisal, with being so grossly wrong, came in just a few thousand over loan amount, giving the buyer what he thought was the position to negotiate it lower. The appraisal didnt meet lender requirements and therefore he could walk away with earnest money. I told him not a dime less. Fishy in every aspect of it, but no way to prove it. Hopefully the protest actually happens and values meet requirements, but that is dependent on buyer cooperating.



Do you really think the thoughts of a sellers realtor would be considered over a licensed appraiser in the eyes of the buyer's lender?

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This is highly unlikely. The lender doesn't hire the appraiser directly. They get them through a third party source. This was put in place just for this reason.

Are you getting comp's through the MLS?

[MacDaddy67]

I was on the receiving end of one of these transactions...

Basically the owner remodeled the house completely and "over built" by $200,000....

2 separate appraisals came back $75k less that contract price.....

I assumed he would back out, but he didnt...

Whoop!!!

[Chad_E]

This is highly unlikely. The lender doesn't hire the appraiser directly. They get them through a third party source. This was put in place just for this reason.

Are you getting comp's through the MLS?

That may be true in your area, but not everywhere. My lender most certainly hired the appraiser directly. As did the lender of the buyer who recently purchased our last house. My lender stated they have a rotating list of 3 appraisers and whoever was up next got the appraisal.

[RiverRat1]

You see this every day in dfw market. It’s crazy hot, buyer puts well over asking and waits for appraisal. Appraisal comes in low and price is adjusted. Can’t expect buyer to pony up the difference for lender to approve loan. We are due for a market correction!

There will be no market correction IMO Not without a major event that tanks the stock markets.

[Sticks&Strings]

That may be true in your area, but not everywhere. My lender most certainly hired the appraiser directly. As did the lender of the buyer who recently purchased our last house. My lender stated they have a rotating list of 3 appraisers and whoever was up next got the appraisal.

I used to be in this business and my dad and brother in law still are.

Lender can no longer choose the appraiser. They send it to an appraisal mgmt company and they send the next up appraiser out. This is good as it helps prevent fraud, but bad because the appraisers arent experts in any market. You typically want an appraiser that lives and works in a certain area as they know which hoods and schools are hot, and which are not.

Seller here definitely needs to protest. Also I saw where someone here said it is a lender trick to get buyer to put more money down, and that is so far from the truth it's not funny. As a lender, you want the deal to be as smooth as humanly possible so the deal closes, or you dont get paid. Asking someone for more money that may destroy the deal is the last thing you want to do...trust me. I have gone in and lowered fees before (no longer legal) to prevent buyer needing more cash as I knew it would blow the deal.

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[Miller]

That may be true in your area, but not everywhere. My lender most certainly hired the appraiser directly. As did the lender of the buyer who recently purchased our last house. My lender stated they have a rotating list of 3 appraisers and whoever was up next got the appraisal.

You care to state who your lender is? The lender does "hire" the appraiser, but it is through an Appraisal Management Company.


To the original poster. It sounds like there is a good chance this deal will fall through as the original appraiser will probably not come up all the way to the contract price and you don't want to come down price. If it does I would probably ask a lawyer, but if it were me I would amend my Seller's Disclosure to state that you have a recent Appraisal. It sounds like you received it or at minimum have a lot of knowledge of it.

Hopefully, you will have better luck with the next buyer and then the appraisal. It seems like that when a deal falls through it usually works out better in the end anyhow.