Low Appraisal

[aauummm]

Two houses in the last six-months have closed on the street. One for $172,900 and second for $140,000. In last decade no house has sold for less than $105,000.

Get an ISU alum (Cyclone fan) as your appraiser. I lucked out the last time I refinanced-he was a big Cyclone fan and booster. Very nice guy and I was able to talk to him about housing values in the neighborhood and I had some comps for him. This was in Altoona and with Bank of America.

 

[Naughtius]

Did the appraiser know you were renting it out? There are a couple formulas they can use to determine value, and one is its income-earning potential. See if your lender could approach it from that perspective.

 

[dmclone]

I assume you owe less than $80k on the property so why does it matter?

 

[TheBentStick]

It sounds to me that you're trying to refinance with the current loan holder; someone like Wells Fargo? Go to someone different to create some competition. I'm not a Wells Fargo hater, but my neighbor just tried to refinance with them and they came back with a low appraisal. Then he went through someone else and the appraisal was $50,000 higher! The big banks seem to be going this route to ensure the homeowner pays PMI- which essentially is insurance that covers them, not the buyer.

 

[00clone]

It sounds to me that you're trying to refinance with the current loan holder; someone like Wells Fargo? Go to someone different to create some competition. I'm not a Wells Fargo hater, but my neighbor just tried to refinance with them and they came back with a low appraisal. Then he went through someone else and the appraisal was $50,000 higher! The big banks seem to be going this route to ensure the homeowner pays PMI- which essentially is insurance that covers them, not the buyer.

With the caveat that I haven't been a WF customer in 14 years, if you're banking with Wells Fargo, place your jiblets in a vice and turn the handle, it'll be more pleasant.

Personally, I feel you can't beat a smaller, local bank. Larger banks see their customers as revenue streams to be maximized, local banks see them as customers.

 

[capitalcityguy]

It sounds to me that you're trying to refinance with the current loan holder; someone like Wells Fargo? Go to someone different to create some competition. I'm not a Wells Fargo hater, but my neighbor just tried to refinance with them and they came back with a low appraisal. Then he went through someone else and the appraisal was $50,000 higher! The big banks seem to be going this route to ensure the homeowner pays PMI- which essentially is insurance that covers them, not the buyer.

It is hard to create competition when so few banks are interested in refinancing investment property that are in the form of a townhome/condos. I'm speaking from first-hand experience. I just refinanced, and had five banks (both local and national) say they weren't interested in refinancing investment property. Mine too is a townhome and even though I have 816 FICO score and townhome is located in one of the nicest neighborhoods in West Des Moines, I struck out until I finally had luck with Community State Bank.

 

[Cyclonesrule91]

With the caveat that I haven't been a WF customer in 14 years, if you're banking with Wells Fargo, place your jiblets in a vice and turn the handle, it'll be more pleasant.

Personally, I feel you can't beat a smaller, local bank. Larger banks see their customers as revenue streams to be maximized, local banks see them as customers.

I agree totally. I refinanced this summer and went with a local smaller bank and got the hell away from US Bank and Bank of America (2nd) and couldn't be happier. Was very pleased with my appraisal as well. I'll never purposely get a loan from US Bank again and I hope no loan I have will be sold off to them.

 

[2forISU]

I assume you owe less than $80k on the property so why does it matter?

To buy more properties with the equity. Plus if something happens to the house you will get what the appraisal value is.

 

[cycloneworld]

Two houses in the last six-months have closed on the street. One for $172,900 and second for $140,000. In last decade no house has sold for less than $105,000.

There should be a page in the appraisal that shows the comps they used and why they discounted your property so much (less bedrooms, less square footage, no garage, etc.). Can you post that? That will determine where they were "wrong" (or right).

I flip houses on the side and have gone through numerous appraisals and I agree that they are a crapshoot (which is why you should be there when the appraisal is happening so you can explain the things, ie. value, you've added to the house).

 

[CLONECONES]

if you go on Zillow/any home value search

you can ask the appraiser why he didn't use specific comps in his sales approach. if on page 2 of your appraisal you see alot of adjustments for the comps - ask why he didn't use more comparable houses.

 

[cycloneworld]

if you go on Zillow/any home value search

you can ask the appraiser why he didn't use specific comps in his sales approach. if on page 2 of your appraisal you see alot of adjustments for the comps - ask why he didn't use more comparable houses.

Zillow is a great tool to get general values but its by no means accurate.

Comps are the one and only way a good appraiser will determine the value of your house (along with the proper adjustments).

 

[CLONECONES]

Zillow is a great tool to get general values but its by no means accurate.

Comps are the one and only way a good appraiser will determine the value of your house (along with the proper adjustments).

it's the only real tool the public has to use other than the accessors office

 

[cycloneworld]

it's the only real tool the public has to use other than the accessors office

Agreed. But you won't get anywhere telling an appraiser "but the Zillow value is $X. They should be looking at actual comps and adjusting the value based on the differences.

 

[CLONECONES]

Agreed. But you won't get anywhere telling an appraiser "but the Zillow value is $X. They should be looking at actual comps and adjusting the value based on the differences.

i work with appraisers on a daily basis and the only problem I see from the borrowers standpoint is they are not aware of other comps the appraiser didn't use, just the ones listed on page 2. Zillow can at least provide recent sales info and rough value estimates better than an evil lender would

 

[ArgentCy]

As an appraiser I might be able to help answer a few of your questions. Most of the others in the thread have given some pretty good information. Appraising a property is certainly not an exact science and I even argue with the fact that we have to give the banks a specific number. The value of your house will also depend on other factors such as do you have to sell it quickly or can you wait a long time for the perfect buyer to come along. There is / should be language in the appraisal that says something to the effect of its the value we would expect the typical, informed buyer to pay in a certain time frame stated as Exposure time (we use 90-120 days typically but this is new in 2012 USPAP).

There are certainly some good appraisers and some not so good appraisers and the opinions can change. As one poster stated though since this is a rental property it really can change the banks attitude due to lots of different regulations and the simple fact that Fannie Mae / Freddie Mac probably won't insure that loan. Your best bet would be a smaller community bank that you know or knows you and keeps more of their loans in-house. The appraisal is not the final say as the banks can do whatever they want (ie make the loan anyway, deny it, or request another appraisal) but they also have tons of new regulations do to the ridiculous Dodd-Frank law.

Finally, a rental can be pretty hard on a property and result in faster depreciation. Was it in fairly good condition and clean when the appraiser did the inspection? Did they use the minimum three comps or did they use 4-6 which is better IMO. Look at the comps they used, are they within a mile? Are they similar to your property? You may want to drive by them as well just to give a look at them. What the houses sell for on your street doesn't matter that much other then it should be that you house is in a good higher predominant value location. Are the other comps in the same neighborhood or are they mostly from lower value neighborhood? Those are the biggest factors.

Also, the appraisal should not have much of anything to do with your insurance value if something happens to the property. Your insurance policy and company should determine that more than the appraisal unless you don't have anything to document the improvements that you completed.