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What do I do about a terrible appraisal?

We are purchasing a home.  The appraiser did a horrible job on the appraisal.  It took him a full 4 weeks to submit the final report, and the appraisal came in low.  He also did such a poor job choosing comps that the underwriters rejected the WHOLE report.  We were willing to accept the lowball appraisal, but how do we get past the terrible comps and the underwriter's rejection of the appraisal?  He is unwilling to find more comparable comps, and we are being told by our mortgage company (2 days after our scheduled closing) that there is nothing we can do.  They say they are "not aallowed by law" to request a 2nd appraisal.  They advised us to write a letter stating valid reasons why THEY rejected his appraisal.  It doesn't make any sense.  Do we have to start all over with a new company?  Do we have any recourse from the appraiser or the mortgage company?
  • April 29 2014 - Philippi
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Answers (4)

Writing a letter along with comparables from a realtor and a letter from your loan officer manager to submit to the appraisal management company could help.  I do not feel that the underwriter in this situation rejected the appraisal because they felt comparables were to high, the problem here is the appraiser and the underwriter had no choice but to deny the file.

Have your loan officer speak to the underwriter to see what additional steps that he/she can take to try to make this happen for you.  If your doing a conventional loan see if going with another lender is reasonable!  Nothing against your current loan officer but that just might need to happen.

  • April 30 2014
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It depends upon the type of loan you are obtaining. If the loan is FHA or VA, there is a case number assigned to the appraisal and a new one cannot be ordered until that case number expires (6 months from date of case # assignment). If the loan is conventional, it does not stick to property beyond the course of the transaction with that lender. If you have a conventional loan and the lender cannot order a new one, you may want to consider switching lenders. Given that a new appraisal will benefit the seller as well, they will likely be amenable to an extension to resolve the issue.

If the loan is FHA or VA, your Realtor can provide comps supporting a higher sale price and rebut the appraisal. Please keep in mind that the appraiser is under no obligation to respond to that rebuttal, however if there are multiple bad appraisals by the same appraiser, he may lose his eligibility as a VA/FHA appraiser. If the appraisal is not revised, you may not have any recourse, but neither will the seller. The seller will not be able to circumvent that appraisal unless they go with a buyer using a different loan product or the buyer is willing to pay the difference out of pocket.
  • April 30 2014
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Yes, tell the lender to order another appraisal, lender's can do whatever they want.
If that does not work, have buyer go to another lender
  • April 29 2014
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The biggest problem with low appraisals happens when they are done for FHA financing.   FHA appraisals live with the property for 6 months and nobody can do anything, that I know of, about it.  It sounds like an FHA
  • April 29 2014
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