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Answers (8)
- Vince Curtis, "SoCal Appraiser"
- Contributions:4697
Since this post is almost 1.5 years old, Ill just mention a couple things on contesting appraisals.
These days for lender appraisals, a type of firewall has been recently created between the appraisers and the client - thats you - to keep the appraiser independent when valuing homes. In the last few years, many in the industry felt we were being pressured by loan brokers to 'hit' a value to 'make' the deal fly.
The best thing to do when getting a lender appraissal these days is to be (1) armed yourself with sales data in your neighborhood of what has sold and explain to the appraiser how that sales data is oor is not comparable to your home.(2) make a list of ALL features of your home, and a list and cost of any recent upgrades to your home (3) MEET the appraiser at the appriasal and communicate with him/her whats going onl..tell them any backstory of why you are re-fi-ing, or selling or whatever.
Remember, appraisers are human, sites like Zillow, Trulia, etc are not.
To Dennis - appraisers and/or assessors are only trying to get to the truth of what your home is worth for the reasons needed - if they increased your taxes based on an increased assessed value, that just means you were probably paying too LITTLE in the first place, be glad they can hit you up for retroactive taxes...If everyone pays too little taxes, thats less services for your community...
These days for lender appraisals, a type of firewall has been recently created between the appraisers and the client - thats you - to keep the appraiser independent when valuing homes. In the last few years, many in the industry felt we were being pressured by loan brokers to 'hit' a value to 'make' the deal fly.
The best thing to do when getting a lender appraissal these days is to be (1) armed yourself with sales data in your neighborhood of what has sold and explain to the appraiser how that sales data is oor is not comparable to your home.(2) make a list of ALL features of your home, and a list and cost of any recent upgrades to your home (3) MEET the appraiser at the appriasal and communicate with him/her whats going onl..tell them any backstory of why you are re-fi-ing, or selling or whatever.
Remember, appraisers are human, sites like Zillow, Trulia, etc are not.
To Dennis - appraisers and/or assessors are only trying to get to the truth of what your home is worth for the reasons needed - if they increased your taxes based on an increased assessed value, that just means you were probably paying too LITTLE in the first place, be glad they can hit you up for retroactive taxes...If everyone pays too little taxes, thats less services for your community...
- Dennis Herman, "Ez1Realty"
- Contributions:137
I hear you and know what you mean. I refinanced my house a year ago. The appraisal also came in low. I looked at it, low and behold, the appraiser used 2 comps outside the neighborhood. One home had rail road tracks in the back yard, the other a block away. This is more than a mile from my house, I have a woods in the back of my yard. Quite a difference to any buyer.
Because of the appraisal my loan to value ratio dropped, it cost me an additional $800 in closing costs. I argued and they dropped it to $400.
So I thought to myself, I can make up the other $400 on taxes by contesting the city assessed value. I took the appraisal to the city, handed a copy to the assessor. He looked at the comps, laughed, and told me, "your in the Real Estate business, you know this appraisal is bogus. These comps should have never been used. I don't know who did this appraisal, but this is something we would never do."
Well the city did take a closer look at the appraised value, and guess what. The city raised the value on my house 25K and now I have to pay an extra $500 in taxes per year.
Appraisals are still opinions, which we wind up paying for.
Because of the appraisal my loan to value ratio dropped, it cost me an additional $800 in closing costs. I argued and they dropped it to $400.
So I thought to myself, I can make up the other $400 on taxes by contesting the city assessed value. I took the appraisal to the city, handed a copy to the assessor. He looked at the comps, laughed, and told me, "your in the Real Estate business, you know this appraisal is bogus. These comps should have never been used. I don't know who did this appraisal, but this is something we would never do."
Well the city did take a closer look at the appraised value, and guess what. The city raised the value on my house 25K and now I have to pay an extra $500 in taxes per year.
Appraisals are still opinions, which we wind up paying for.
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
jrod148,
I don't blame you for changing your lender/broker. The appraisal info given you was 100% wrong!
jrod, you can't fix your appraisal. Your new broker/lender may not even be able to choose the appraiser for your property! Guidelines are changing fast. Many lenders now order the appraisal, not the broker.
Regardless of the minor areas of inaccuracy in your property's description, it won't matter much or at all.
I just had a $1.3M property with on a lot that was over 4K sq ft more than comps. My appraiser did not add any value for that. Why? This was a single story and 6 out of our 8 comps where 2 story.
Our problem began when the lender required an even mix. My appraiser had to scounge for 2 more single stories.
When property here is dropping 2% per month it's a minor item. Also we were at 58% LTV. If the appraisal was cut down more by the lender we could go to about $300k down in value and still be OK.
.... Best wishes, Rudi
I don't blame you for changing your lender/broker. The appraisal info given you was 100% wrong!
jrod, you can't fix your appraisal. Your new broker/lender may not even be able to choose the appraiser for your property! Guidelines are changing fast. Many lenders now order the appraisal, not the broker.
Regardless of the minor areas of inaccuracy in your property's description, it won't matter much or at all.
I just had a $1.3M property with on a lot that was over 4K sq ft more than comps. My appraiser did not add any value for that. Why? This was a single story and 6 out of our 8 comps where 2 story.
Our problem began when the lender required an even mix. My appraiser had to scounge for 2 more single stories.
When property here is dropping 2% per month it's a minor item. Also we were at 58% LTV. If the appraisal was cut down more by the lender we could go to about $300k down in value and still be OK.
.... Best wishes, Rudi
- tazgirl43
- Contributions:3
I am in this same situation. I was into a refi, got the appraisal which came back 30K under and even the lender felt it was low and said an under appraised home is just as bad as an over appraised home. I was turned down for the refi because of the appraisal. I hear that in March something will come about that will help so I will wait and watch. I have a 5/1 arm that is up in Nov. of this year.
- Doug Hutchins, "90 day rate locks"
- Contributions:721
J-Rod.
To answer your question: have a local RE agent pull all comps (sold and closed, not listings) over the last 3 - 6 months in your area. Be realistic. Don't cherry pick. If comps range from X to Y and you're between those numbers then the appraiser probably did a good job. They wont take sales and bump you up $20k over all prices paid...not in this market anyway. If all sales were over the figure the appraiser gave you, then maybe you could write a letter to your lender with the raw data attached, and ask that they pass the info onto the appraiser. Usually, the appraiser has more data verifying his number...
As far as taking that new appraisal (assuming it now come back higher) and going off to another lender...most lenders are not going to take someone else's homework...they'll order their own...which may be worse than what you already have. If the current lender agrees to have the report reviewed, and the appraiser comes back with a higher amount...stick with that lender (unless the rate is terrible).
To answer your question: have a local RE agent pull all comps (sold and closed, not listings) over the last 3 - 6 months in your area. Be realistic. Don't cherry pick. If comps range from X to Y and you're between those numbers then the appraiser probably did a good job. They wont take sales and bump you up $20k over all prices paid...not in this market anyway. If all sales were over the figure the appraiser gave you, then maybe you could write a letter to your lender with the raw data attached, and ask that they pass the info onto the appraiser. Usually, the appraiser has more data verifying his number...
As far as taking that new appraisal (assuming it now come back higher) and going off to another lender...most lenders are not going to take someone else's homework...they'll order their own...which may be worse than what you already have. If the current lender agrees to have the report reviewed, and the appraiser comes back with a higher amount...stick with that lender (unless the rate is terrible).
- Donnovan Stordahl, "dstordahl"
- Contributions:43
Hi Jrod:
Although we all love this website (Zillow.com), it does not take into account all factors involved in the process of evaluating a home's true value.
Zillow is very formula based, not human, and that is why unbiased appraisers are needed to determine the exact market value.
The appraiser will consider CLOSED comparable sales within a 0.5 mile radius, within the last 180 days. If there are discrepancies on the sq ft. and lot size, they can take that into account. The hardest comparison is to go from a 2 bd / 1 ba to a 2 bd / 2 ba, or a 3 bd / 2 ba to a 3 bd / 3 ba, as the market value for such properties (on the higher side) is much more desirable.
With that having been said, YES, if you ordered the appraisal directly YOURSELF, and not from the Lender, it is YOUR APPRAISAL, and belongs to you.
If you were not working with a mortgage broker, you might be stuck, as typically the appraisals are certified to the company ordering them and can't be transferred without an additional fee.
As the rules for qualifying for mortgages keep getting tighter and tighter, your lender will keep changing the rules on a weekly basis. That's why I ALWAYS recommend that you deal with a REPUTABLE Mortgage Broker, whose sole responsibility is to keep up-to-date on the changing guidelines, and has a Fiduciary responsibility to YOU, the customer.
Hope this helps!
- jrod148
- Contributions:9
The other comparables the appraiser used where sold six to eight months ago also. He noted that there were no recent sales and had to use prior sales data.
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3408
I doubt you will have much luck contesting it. Lenders want to see comparables within 90 days of your report, so the sale from 6 months ago is not going to carry any weight.
Also, the upgrades typically only will play a small role in determining value, by small I mean 5-15,000, not 50,000...so I don't think missing upgrades would have made that much difference. Many borrowers are dissapointed to learn their home is not worth what they think, but the lender isn't really concerned with your opinion, they want the appraisers opinion.
The good news for you is the new stimulus plan has talk of a situation that applies directly to what you are trying to do. The rumors of the new plan is it will allow refinance up to 105% of current market value (with NO appraisal needed in some cases). Since cash out was not part of your goal, you are perfect fit for this. I would wait a few weeks for the details of this plan to be released and then see if you can qualify for this program.
Also, the upgrades typically only will play a small role in determining value, by small I mean 5-15,000, not 50,000...so I don't think missing upgrades would have made that much difference. Many borrowers are dissapointed to learn their home is not worth what they think, but the lender isn't really concerned with your opinion, they want the appraisers opinion.
The good news for you is the new stimulus plan has talk of a situation that applies directly to what you are trying to do. The rumors of the new plan is it will allow refinance up to 105% of current market value (with NO appraisal needed in some cases). Since cash out was not part of your goal, you are perfect fit for this. I would wait a few weeks for the details of this plan to be released and then see if you can qualify for this program.
How can I contest my home appraisal?
We recently began the refinance process with our current lender. During the process, my lender asked me what I thought my house was worth and after telling him my opinion, he assured me that the appraisal would come back with that amount or very close to it. He even stated that they tell the appraiser what amount we are looking for. Please note that I am not try to take any money out, I am just trying to lower my interest rate and get to an 80/20 equity status. Well, two weeks later, the appraisal is back and it is $50,000 lower than what we were looking for. After reviewing the appraisal, we noticed a few mistakes and discrepancies from our previous appraisal two years ago (square footage variances, not noting improvements we have completed, etc). Also, the comparables he listed did not include a home that Zillow has listed as being sold 6 months ago. That house is very similar to ours and sold for close to the amount I thought our house was worth. Does anyone have experience and advice as to how I can contest my appraisal? Should I go back to the actual appraiser or start with the appraisal company? I need to do this tactfully because I do not want to pay another $500 for another appraisal. I contact my lender and he told me that they are not involved with the appraisal “That is why we higher an appraiser.”
Thank you in advance.
Also, once I have the appraisal fixed, I plan on going with a different lender.
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