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Our Appraiser did not count more then half of our house, what can we do?

My wife and I purchased a beautiful home last year and we are currently trying to re finance the home to get cash out and to get a new rate. We have been approved of the loan and our estimate and the lender was this house is worth up to 200,000. Our home is a 3 bed, 2.5 bath house built in 2006. The lender had an appraiser come over yesterday and we were told some pretty shocking news. He said that the downstairs is below grade and will not be counted on the home. So he appraised the house at 1 bed, 1.5 bath , and only 900sf. The appraised value was 98,000 which is less then we owe on the house. We were denied the loan and don't want to pay another 300 on a appraiser if we don't have to. When we bought this house it was advertised on Zillow and all other sites as a 3 bed, 2.5 bath , AND 2100 SF. Even the county tax record has it at  2100 sf . I have been informed by someone that if this is true and it will not be counted that i can go after the lender who sold it to me. Please help us with any information you can, my wife and i our first time homeowners and were in a really tough spot. Thanks
  • July 15 2014 - Nashville
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Answers (5)

 Below grade improvements have value though at a lower per sq ft calculation. Request you Realtor run comps for last 12 months and look specifically at homes with finished basements. Likely the issue is the appraiser not the property, but you can discuss the sq ft issue with a couple of appraisers in your area and get their feedback.  Was the lender a local bank?

  • July 16 2014
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Does the lower level have windows on the front, side, and rear? Use a search engine and search for Recent Home Sales in XXXX ( your zip code ), then look to see the selling price on the split level homes. Are the comps in your appraisal ranch style or also split level? 
  • July 15 2014
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Profile picture for ccioe
You may want to contact the appraisal company who did the original appraisal when you first purchased your home. Pehaps they will have some input that can help you to dispute your current appraisal, or maybe they can do another appraisal at a discounted price since they already have it in their system.
  • July 15 2014
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Here in Western Pennsylvania we do use the term "below grade" meaning a finished basement. This does not count as "living space" though when we list houses either... so I'm not sure if it may be different in your area?
  • July 15 2014
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Profile picture for CA Direct Lending
I have not heard the term, "below grade".  I have heard the term, "unpermitted additions" and those cannot be counted. 

Do you still have a copy of the appraisal when you purchased the home?  I would compare that one to your latest appraisal and see if you can find any discrepancy in the notes. 

If "below grade" is an opinion rather than a fact, another appraisal with another lender, or, a rebuttal with the current lender/appraisal would be an option I would pursue as well. 
  • July 15 2014
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