Failed FHA appraisal, need advice.

[Blackguilt]

Is there a reputable website i could use to find comparable sales that i could submit to my mortgage company and the appraiser to make a case for a new appraisal or a revised one. I don't want to foot the bill for a total redo considering my appraisal cost a little over 700 for the shoddy job i received already.

 

[hastalavista]

That is why I feel that the appraiser is not doing their job, because it took them a month to turn in a uacceptable FHA appraisal...[/FONT][/COLOR]

I'm in agreement with you 100%.
The 3-comps/12-months is a requirement for FHA. There is no wiggle-room, and an FHA-approved appraiser should have known that.
Assuming the appraiser somehow had a brain-lapse, I would then expect the appraiser to correct the mistake rather promptly. If that meant doing more work the second time to make things right vs. not doing what should have been done the first ime, so be it.

So, your concerns and complaints are legitimate.

OK, so what do you do.....

Since your goal is to purchase this under an FHA-program, I think your best option is this:
A. Tell the lender they can reject the first appraisal and re-order another appraisal that is done correctly. This is consistent with FHA requirements. The lender may have to inform FHA that the reason for the re-order is because the first appraisal is deficient. That may have a consequence for the original appraiser, but that is not your problem.
B. If the lender says they cannot do that, then I'd simply tell them this:
"Look, you guys have the ability to determine if an appraisal is acceptable or not. This one was clearly unacceptable because it doesn't meet a basic FHA requirement; the appraiser you selected should have stopped the process then and informed you that based on his research, the assignment cannot be completed because of lack of the required 12-month comparables. Which, at that time, you could have said, 'ok, we are going to have another appraiser take a look at this' and you could have re-assigned it then without much issue.
Now, its an issue, but that's not my problem, it is yours. So you have a choice:
If the appraisal is unacceptable, you have the grounds for ordering another appraisal; I'm only paying one-time, so the second appraisal is on your dime.
If you don't order another appraisal and make this right, I'm going to call FHA myself as a consumer and complain that you are obtaining deficient FHA appraisals and not taking the required steps to correct that problem. I'll let them decide if I have a legitimate complaint or not.
So tell me what you are going to do so I know what I'm going to do."

Good luck!

 

[William K]

It could have taken the appraiser longer because there was not readily available data which met the lenders criteria. Its easy to turn an appraisal around quickly when the data is plentiful and readily available, not so when it is not. Many times the appraiser is forced to go to secondary or even third choices in searching for acceptable data.

The fact that "I was told by my mortgage agent that the appraiser had limited experience in this area", is more of an indictment on the lender that they chose to use that appraiser knowing this! Lenders like to throw it to the appraiser however the lender is ultimately responsible for the appraisal and the appraiser who performs it. If they knew the appraiser had only limited experience then you have to ask yourself why would they decide to use that appraiser?

Also keep this in mind, just because the appraisal did not support making the loan, does not mean the appraiser is at fault for the delay. Many times lenders will be, shall we say, less than truthful and not want to hear the appraiser saying ," there is limited data and it does not meet FHA guidelines or requirements so it will take some time for me to try some secondary sources for data".
Instead it becomes , the appraiser said it will take a little longer, the appraiser said it will be just a few more days, the appraiser said values not a problem. Then the Lender finally says, " Just give us the report with the data you have, I don't care what it is just give us a report!"
Only to receive the report and then be told by the underwriter it is unacceptable. They then use the excuse "the appraiser didn't do their job, I didn't know any of this, he just said it was going to take a little longer and value was fine"

Just one more thing. I don't know who told you it, but Well's is NOT the only lender doing FHA loans in your market.

While the appraiser may be wrong I tend to lean towards you are not being told the complete truth by the lender or AMC as to the communications from the appraiser.

The last time I informed a client the available data did not meet FHA guidelines, they still wanted the report with the best data available only to tell the agent and buyer "the appraiser couldn't appraise it out so we can't do the loan".
Well that wasn't the truth, the truth was at this time the sales data doesn't meet FHA guidelines. It's not the appraisers fault , we just report whats there. Some times those paid by commission just don't want to hear it and need to place blame.

 

[Dan Umstead]

WF owns their own appraisal management co., so you paid Wells to pad their pockets and find the cheapest appraiser in the "area". WF make money on you, even with the appraisal fee, which they do not disclose to you.

*****Note- I said "area", because I would be surprised if there were no other FHA appraisers in closer proximity.

 

[Webbed Feet]

Currently attempting to buy a 4 unit building with an FHA loan through Wells Fargo. Final mortgage amount to be 107k, Asking price was 120k
"assessed value" was 119k

Independent fee appraisers doing assignments for purchases or refinancing do not "assess" values.

The issue is comparable sales, the appraiser came back with no comparable sales in the last 12 months of a 4 unit in that price range. There were a few sales of "slums" basically but nothing on the upper end.

Currently looking at a FHA property reject due to lack of recent comparable sales. I am confident though that the appraiser did not do his job properly. Wells Fargo used a guy that is 45 miles away from this market, has no experience in this market. Did the physical walkthrough on Oct 31st, did not receive the appraisal until Dec 6th. This whole time he kept saying that we would have it on Friday. Every week, during that time span. He is asked by underwriting to search competing markets and returns later that day with "there are no comparable sales in competing markets" It leads me to believe that he did not bother to even look.

So... Like the appraiser told you all of this personally, or are you being told this by someone not the appraiser? The distance from the subject to the appraiser's office or address doesn't mean diddly.

Do I have any recourse?

Failed FHA appraisal, need advice.

Sorry, but I do not read anything that indicates the appraisal failed. Appraisers do not create lending guidelines or rules, lenders do.

 

[Webbed Feet]

I did a little searching myself, and found several comparable (in my opinion) properties sold in the last 12 months in similar nearby areas.

In your opinion....

They were all around the same price range that I am purchasing or more. What I looked at were nearness to a community college, town size, as well as major industries in the area (medical, elderly/developmentally disabled care). I could not tell if they were 4 units, only that they were multi-family homes converted from previously single family homes with the original structure being the same age of the home I'm trying to purchase.

The issue is that I did so using trulia and zillow, and upon reading several threads these are not reliable sites. Is there a more reliable type website that I can use to double check these properties, and maybe find out the number of units in them?

In regards to experience of the appraiser in my area: I was told by my mortgage agent that the appraiser had limited experience in this area, as well as the seller's realtor who escorted the appraiser through the property. I was also told that we were not allowed direct contact with the appraiser due to federal regulations.

So what you have is hearsay.

A) Yes, the appraiser took way longer than expected, and knew it was an FHA property. If he was having issues during this time finding comparable sales that did not meet FHA requirements he did not let the lender know, and turned in a report that was dissatisfactory. It was not until the non-conforming report was turned in that we were aware of the ineligible comparables and then asked for eligible comparables in competing markets.

Or so you are being told.

B) In regards to experience of the appraiser in my area: I was told by my mortgage agent that the appraiser had limited experience in this area, as well as the seller's realtor who escorted the appraiser through the property. I was also told that we were not allowed direct contact with the appraiser due to federal regulations. He is from a major city (Buffalo, NY) and dealing with a much smaller location (Jamestown, NY)

Again, hearsay.

C) The 107k financed is including a sellers concession, so the appraisal came back with a appraised value of 119k. The purchase price without the concession is 105k so therefore the appraised value is fine.

Glad it has your stamp of approval.

An additional question:
If I were to find a 2-3 unit property rather than a 4 unit that rented for less per unit, was in the same condition, and had less sq footage, yet sold for the same or more than the asking price, let alone the lower sale price, would I be able to make a case to use these as comparable properties even though they are not 4 unit buildings?

P.S. Thanks for all the help thus far everybody

I can pretty much promise you the issue is not regarding if two and three unit properties can be used for valuation purposes against a four unit property.

 

[Webbed Feet]

The appraiser indeed used all comparables outside of 12 months. This is the issue. Everything else was fine, the appraised value, the condition of the home et cetera.

The lender obviously had an issue, and told the appraiser to redo it with comparable sales within the last 12 months for the first 3. Appraiser responded with there were none. The underwriter then authorized him to expand the search to competing markets and surrounding areas. Almost instantly the appraiser said that there were none in those areas as well. Currently it is in a second level of underwriter review, but we are looking at a FHA property reject due to lack of comparable sales

The underwriter has no such "Authority" There is a little known rule about appraising that all the very best appraisers adhere to. The rule is "The client gets to pick the subject, the appraiser gets to pick the comps."

That is why I feel that the appraiser is not doing their job, because it took them a month to turn in a unacceptable FHA appraisal, and that was with just the local area. Then they are authorized to look in a much broader search area and respond in an hour that there are none. From my perspective it would seem that they did not even want to bother to try.

From my perspective, the appraiser had already searched his or her *** off for hours looking at every source they could and could not find anything else. I rather strongly suspect your lending staff is very much failing to tell you the entire story. It is sooooooooo easy for them to play "Blame the Appraiser!"

 

[Webbed Feet]

I'm in agreement with you 100%.
<....snip......>

Brother DeSaix, how do you know the lender actually originally sent the appraiser assignment conditions that notified the appraiser it was for FHA? How do we know our poster here has or has not even seen a copy of the appraisal report?

 

[Webbed Feet]

It could have taken the appraiser longer because there was not readily available data which met the lenders criteria. Its easy to turn an appraisal around quickly when the data is plentiful and readily available, not so when it is not. Many times the appraiser is forced to go to secondary or even third choices in searching for acceptable data.

The fact that "I was told by my mortgage agent that the appraiser had limited experience in this area", is more of an indictment on the lender that they chose to use that appraiser knowing this! Lenders like to throw it to the appraiser however the lender is ultimately responsible for the appraisal and the appraiser who performs it. If they knew the appraiser had only limited experience then you have to ask yourself why would they decide to use that appraiser?

<....snip.....>.

Because he or she was the only doofus willing to take the assignment for $225 while the AMC charged the poster $700 and pocketed the rest?

 

[Lobo Fan]

It just might be the truth that there are no meaningful comps that have closed in the past one year. It may be that the appraiser is simply being factual. The problem is that nobody wants factual, they want an appraisal that will close the deal. So here is a buyer, complaining that the appraiser will not fabricate comp data. Wells is notorious for not giving straight answers when you ask them for guidance. Nobody but the appraiser cares if the report is truthful and accurate.

If the report had come in with the acceptable comps at your purchase price, you would never take another look at it until you were in default and looking for a scapegoat.

Sometimes the truth hurts.