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Suspicous appraisal

Love the house. Supposed to close in a matter of days. lt is a flip in an older neighborhood, but have been worried from the start if it is over priced / over improved for the neighborhood, found only a few comparable sale in the area. Since it is FHA was hoping if it is overpriced it would be reflected in the appraisal. I re-researched the appraisal and things look fishy. All comps were flips or renovated, in the same 1/2 mile area, same size, age but here is what I just found out. Comp 1 - also a flip being ssold by the same owner as my house. Comp 2 - also being flipped by same owner as mine. Comp 3 - is only a listing, not a sale (I have been told that this is not allowed bcause what it is listed for might not be what it sells for). AND this poperty is a coner lot with a 1,500  sq ft larger yard. Comp 4- also a listing only, 2,300 sq ft larger lot AND has been in contract for over a year (or so several mls sites say). I have a feeling the appriaser is in cahoots with seller who is well known in the local flipping scene. ALSO FHA ordered a 2nd apprasial... came back with same EXACT value (3K) over my purchase price - Fishy. Please help, I dont know if I am being scamed or just making myself crazy.   
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June 03 2010 - Vallejo
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Answers (4)

I don't know your mental state. Both appraisals came back over purchase price. No appraiser in today's marketplace is going to play favorites, if they plan on staying out of jail and/or not paying huge fines.

Likewise for you. I hope you applied as a non-owner occupied since you plan on flipping the property. Especially, after stating this on a public forum..... Happy funding, Rudi
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June 04 2010
Depends on the area. Consult a local appraiser who knows that area, and ask what they think. 3K is not that big a deal. The appraiser, in good faith, should have reported the sales as flips and any similar relationships between the comparables and their sellers and/or listing/buying agents. If you think you have been scammed, report the appraier here. It only takes five mintues. You will need a copy of the appraisal though. You can find a local appraiser here.

SOME direct lenders can pick their own FHA appraisers, but only FHA. The laws ruling this are 'a gray area' at best and are up for question.
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June 03 2010
Profile picture for ktinsd
Thanks Wetdog.
I have been told by everyone in the transaction that since it is FHA it has to be a from a pool of state approved apprasers and no one knows in advance who from the pool will be picked. Is that wrong> 
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June 03 2010
Profile picture for wetdawgs
You are making yourself crazy ... couldn't resist, you set yourself up.

I would challenge both the lender and the appraiser on the use of houses that haven't sold yet as comps.    The appraiser tends to be chosen by the lender, so I'm not sure about appraiser in cahoots with the flipper. 
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June 03 2010
 
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