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2 Different Appraisals for same Property

Discussion in 'Ask an Appraiser' started by mianoah, May 20, 2009.

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  1. mianoah

    mianoah New Member

    0
    May 20, 2009
    Professional Status:
    General Public
    State:
    Arizona
    I am not an appraiser but am instead a potential homebuyer in AZ. I am trying to close on a newly built home through a builder. I had gone through 1 of their preferred lenders for the loan process but the appraisal came back 50K lower than the purchase price. As a response to this, we had decided to get another appraisal through the other preferred lender and much to our surprise it came in 20K higher than the purchase price. This puts the two appraisals at 70K gap. In looking at the appraisals, I noticed the first weighed their appraisal mainly on resale comps while the second one weighed mainly on new home sales.

    Not knowing much about appraisals (and hoping you might be able to shed some light), do appraisers have the liberty between choosing comps on new home sales or resales? Any thoughts on what options I might have?
     
  2. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    197
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    Take both appraisals to a competent appraiser (we can find one for you) and have them reviewed. I will bet that appraiser #1 is the guy who is right. Using resales produces a more legitimate report. Builder sales are sometimes inflated, or things are thrown in that are not disclosed.

    If the review appraiser determines one to be fraudulent turn it in to your state appraisal board.
     
  3. Joyce Potts

    Joyce Potts Elite Member

    11
    Feb 6, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Now you have some insight as to why the bubble and meltdown got as big as it did. Be cautious of the appraisers. Seek out reliable, INDEPENDENT appraisers not associated with the builder or the preferred lender. I suspect that if that first appraisal came in that low that should be a warning sign to you. Don't be taken in by sales people about asking price and other builder comps. Why not ask the lender to provide written authorization for that 'low' appraiser to discuss the appraisal with you. Chances are other builder comps are full of concessions that are inflating the recorded deed prices.

    Unfortunately, you can NOT rely on the appraisals to be truthfully honest as many in the general public mistakenly believe.

    And now others on this Forum will hack away at me.
     
  4. mianoah

    mianoah New Member

    0
    May 20, 2009
    Professional Status:
    General Public
    State:
    Arizona
    If an Appraiser does comps strictly on new homes sales only, does that constitute fraud automatically? I guess another way to ask it is are there any appraisal rules dictating if you need to do appraisals inclusive of both new home sales and resales or is this more subjective and entirely up to the appraisers?

    Also, I did suggest to the builder getting a 3rd independent appraisal but they threw it back at my face stating that they are happy with the 2nd appraisal and that it was consistent with the other appraisals for the other new homes they sold recently. Note that they initially offered to split the 50K difference when we just had the first appraisal and now they won't entertain any incentives or credits or even a 3rd appraisal. This is another battle I'm dealing with. However, I figure if I can get the appraisals determined whether it be low or high I can decide from there. I guess it's more of a peace of mind. If it's trully high then I'm okay with that. But if it's low then I don't want to negative on equity as soon as I close.
     
  5. Ken Tamblyn

    Ken Tamblyn Sophomore Member

    0
    Nov 22, 2005
    Professional Status:
    Certified General Appraiser
    State:
    Arizona
    Builder sales prices are based on slick advertising, deals on upgrades, creative financing, Seasoned salemen and even fake comps. This has always been a problem in AZ. It is much like buying a car. If you go to a dealership, you will most likely pay much more than if you buy from a private owner. Unfortunately, your car is still worth the same amount, even if you pay more at the dealership.

    My question to you is. . .

    If the first appraisal came in 50k below the sales price, why even consider paying more than the appraisal value? That first appraiser probably saved you from paying too much for the house. Especially in Arizona, you can get smokin' deals here, even on new homes.

    So if I were you, I would thank the first appraiser, tell the builder that you will not pay more than the lowest appraisal value and if they say "No" go get another home. There are pleny of them available.

    The first appraisal is most likely the actual resale value of your new home.
     
  6. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    197
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    I agree with this guy.

    They offered to split the $50,000...they were happy to do that then, means they were going to make profit most likely. From what I read here about Arizona, it is as bad as SE Michigan. Our new housing starts, where I live, are down 95%. The reason is that it costs more to build a house than the Market (you, the general public) are willing to spend.

    Have you considered buying a giant McMansion at a serious discount that is in foreclosure instead of a new home? I would think that they are out there.
     
  7. mianoah

    mianoah New Member

    0
    May 20, 2009
    Professional Status:
    General Public
    State:
    Arizona
    Yes, this has raised multiple red flags even for a non-experienced buyer as myself. The only thing that's keeping me from letting this go is I've put in a substantial down payment (over 60K as part of a 20% down) and if I back out I lose all that. The house obviously has all we want since we picked all the options...just not willing to pay more than what it's worth.
     
  8. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    197
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    Please enable your PM.
     
  9. mianoah

    mianoah New Member

    0
    May 20, 2009
    Professional Status:
    General Public
    State:
    Arizona
    Sorry, newbie here. What's PM?
     
  10. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    197
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
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