New Issue - Appraisal Came in Way Too High - Temecula, CA

[akgolfer]

I'm a newbie to the forum, but I need help on what to do with an appraisal we just got for a house in Temecula, CA that we wanted to buy that came in $30,000-$40,000 OVER what it should have.

I know this isn't a common thing in this market and normally would be a good thing but we knew the list price for the house was $40,000-$50,000 above what the appraisal would come in at so we wrote in the offer that both Buyer and Seller would agree to buy/sell at the appraised value if it was below the list price of $370,000.

Needless to say we got an Appraiser that just got her CA license two weeks ago and there where so many errors/ommisions it was not even funny. In addition the only house she picked where the 3 houses the "Seller's Agent" told us when we told him that the house appraisal was going to come in way less. And all three of houses are in the nicest community in the immediate area, in the best area of the community, and have some of the best views in Temecula/Murrieta.

Errors/Omissions:
1) Subject property in not in a clubhouse/pool community - no adjustments made
2) Subject property has average view, no adjustment for the comparables property having the best views in town
3) Subject property is in Temecula on one side of a major road and all three comparables are in Murrieta and on the other side of a major road.
4) Subject property has no landscaping or even a concrete pad in the back yard and the comparable has very nice landscaped yards - no adjustments.

More on #2 above is that there has been 5 homes sold in the highest demand area of the community, 3 on the view side of the road and 2 on the non view side and when adjusted for all other things it is clear to see the "value" of the view was between $25,000 - $30,000 (Yes she chose all 3 view lots for comparasion and made no adjustments on the appraiser and actually listed the view as none on the form).

Conclusion: This is either the worst appraiser ever or make the sellers agent paid her off. Because the house was just bought at a trustee sale for $100,000 less the appraiser "had to" meet with the seller agent to discuss improvements (which was less than $10,000).

What should I do? Thanks for any input you guys have.

AKGOLFER

 

[TEL2002]

You should present your arguments to your lender and demand another appraisal be done by a more experienced & local appraiser. If necessary offer to pay for the 2nd appraisal.

 

[akgolfer]

You should present your arguments to your lender and demand another appraisal be done by a more experienced & local appraiser. If necessary offer to pay for the 2nd appraisal.

Thanks for the input! What I have done so far after reading this site yesterday, is I wrote a letter to the lender making the agruement and also included 8 comparables (including the 3 the appraisal had) with what I thought was appropriete adjustments based on research and hope this will get the job done.

If anybody has any additional options/things I should do please let me know.

I still can't believe how I could get a rookie appraiser in this industry and why would she take a bribe or not spend additional time if this was one of her first ones?

Thanks again

 

[Randolph Kinney]

I'm a newbie to the forum, but I need help on what to do with an appraisal we just got for a house in Temecula, CA that we wanted to buy that came in $30,000-$40,000 OVER what it should have.

I know this isn't a common thing in this market and normally would be a good thing but we knew the list price for the house was $40,000-$50,000 above what the appraisal would come in at so we wrote in the offer that both Buyer and Seller would agree to buy/sell at the appraised value if it was below the list price of $370,000.

Needless to say we got an Appraiser that just got her CA license two weeks ago and there where so many errors/ommisions it was not even funny. In addition the only house she picked where the 3 houses the "Seller's Agent" told us when we told him that the house appraisal was going to come in way less. And all three of houses are in the nicest community in the immediate area, in the best area of the community, and have some of the best views in Temecula/Murrieta.

Errors/Omissions:
1) Subject property in not in a clubhouse/pool community - no adjustments made
2) Subject property has average view, no adjustment for the comparables property having the best views in town
3) Subject property is in Temecula on one side of a major road and all three comparables are in Murrieta and on the other side of a major road.
4) Subject property has no landscaping or even a concrete pad in the back yard and the comparable has very nice landscaped yards - no adjustments.

More on #2 above is that there has been 5 homes sold in the highest demand area of the community, 3 on the view side of the road and 2 on the non view side and when adjusted for all other things it is clear to see the "value" of the view was between $25,000 - $30,000 (Yes she chose all 3 view lots for comparasion and made no adjustments on the appraiser and actually listed the view as none on the form).

Conclusion: This is either the worst appraiser ever or make the sellers agent paid her off. Because the house was just bought at a trustee sale for $100,000 less the appraiser "had to" meet with the seller agent to discuss improvements (which was less than $10,000).

What should I do? Thanks for any input you guys have.

AKGOLFER

I believe a lender will only lend on the purchase price or the appraised value, which ever is lower.

The fact that the appraised value came in near 10% over the purchase agreement should throw up red flags all over the place. Realtors are not known for giving away their commissions like that.

If the appraisal is that bad, help get this person disciplined. You can file a complaint with the Office of Real Estate Appraisers (OREA). see the link: http://www.orea.ca.gov/forms/REA_4001.pdf

 

[Terrel L. Shields]

still can't believe how I could get a rookie appraiser in this industry and why would she take a bribe or not spend additional time if this was one of her first ones?

Since rookies usually work for someone else and for a very low fee due to pressure from their handlers, you couldn't expect much of a job.

Way too many appraisers do not see appraising as a job or a profession preparing a professional report, but as a production job producing a compliance document. Many haven't a clue what they are doing technically speaking.

 

[Pamela Crowley (Florida)]

Who is your loan officer and who is your lender?
(A mortgage broker is NOT a lender.)

A "bribe" might or might not have been involved, as idiot appraisers typically would do something like that just to get another appraisal order. If you have a copy of the appraisal, I sure would like to help you do something about this. If you have it, please send a copy of it to me at email:
pec514 @ yahoo. com

 

[DaniG]

I am an appraiser in Temecula and very familiar with the area. I am also a real estate agent. I have had lenders that are willing to listen and some that just won't do anything. Feel free to e-mail me if you still have issues. I am curious as to which AMC the appraisal was ordered through? Do you know?

 

[Webbed Feet]

<....snip....>
What should I do? Thanks for any input you guys have.

AKGOLFER

If I read this correctly, sorry if I did not, it sounds like what you did as a purchasing "strategy" is offer more money than you thought the property was worth, more than you are willing to pay, and then contracted to that based on a contract contingency over a real estate appraisal that you were confident would arrive at a much lower dollar amount than you offered.

If so, what you should do is NEVER ever do that again! If you were advised to do that by a real estate professional, fire them! If a real estate professional told you not to do that, and you did it anyway, you should have listened. Do not ever offer more than you are willing to pay. But I think you've just learned that one. Interestingly, your the second case of this in the last few months posting on such result and contingency idea in this section of the forum. A buyer betting on a low appraisal outcome, then not getting it.

What can you do now? Well, now you are going to attempt to impinge the opinion of the very appraiser hired by your lender. How well do you suppose that is going to go over with the seller? The seller took an equal risk an El Stinko appraiser might arrive $100,000 low and be on the hook for a contract to sell at that price. What would you think and do if the seller then tried to impinge the appraiser after you got a lovely low price per your sales contract? Would you allow it, or take legal action to enforce the contract? Did you put a clause in that appraiser value contingency that excluded the opinions of "worst ever" or "paid off" appraisers?

Sure, we could tell you all sorts of ways to create great uncomfort for that appraiser. But how would any of that apply to your contractural agreement you made with the seller? Did you write in that contingency the appraiser had to be found to be competent?

For the record here, I'm not really posting any of this for you. I'm posting it for all the public that might read this that might be thinking of using a similar sales contract contingency thinking that they are so sure of something happening, something that is completely out of their control, that it is a good idea to offer far more money than they are willing to pay based on some uncontrollable contingency outcome that they never should ever agree to.

What you should do is get a lawyer. Next time and this time, have that contract reviewed before you sign it, and now that you already have.

 

[AJL118]

and why would she take a bribe or not spend additional time

And why would you say anything about a bribe which is an underhanded insinuation of dishonesty? Incompetence is one thing but being dishonest is just plain stupid in today's world. There are no more crooks in the appraisal world than any other profession. Your lender got what it wanted - quickest and cheapest, and that's today's bogey man.

 

[DaniG]

If I read this correctly, sorry if I did not, it sounds like what you did as a purchasing "strategy" is offer more money than you thought the property was worth, more than you are willing to pay, and then contracted to that based on a contract contingency over a real estate appraisal that you were confident would arrive at a much lower dollar amount than you offered.

Unfortunately, this is what the market here in Southern Cali. has come to. This happens everyday. Typical buyer is submitting multiple offers as high as possible just to get one accepted in the hopes that once the appraisal comes in they can re negotiate the price. They know ( or should) it's over market value. But they also know that they are competing with multiple offers on each property.

I had a buyer put in an offer for a property listed for 235k. Being an appraiser/agent, based on the comps we offered 240k. Got a call from the listing agent, multiple offers, multiple counters and if we want the property we had to offer better than 270k...What... I told the agent it wouldn't appraise that high. She says " we all know a propertys value is determined by what a buyer is willing to pay" Well then, problem solved, who needs appraisers then?? Property ended up appraising for 242k. Fell out of escrow twice, then sold for 245k.

That's the new thing. Offer whatever it takes to get an acceptance, let the appraiser sort out the value then hope to re negotiate the deal. Now the listing agents are countering with Purchase price to be contracted price regardless of the appraised value in hopes this will stop.