Help! VA Appraisal came in $40K less

[TN Pro]

The VA has the best ROV process in the business, as it completely leaves the appraiser out of it (for the most part) Many VA appraisers may not even know that an ROV was placed on their report, and that the RLC issued the NOV at a higher value. This is simple, initiate an ROV.

 

[Tru Red]

The VA has the best ROV process in the business, as it completely leaves the appraiser out of it (for the most part) Many VA appraisers may not even know that an ROV was placed on their report, and that the RLC issued the NOV at a higher value. This is simple, initiate an ROV.

That is true, the VA can do that. I always go back after about a month into the VA Portal and print the NOV for my files.

 

[Tim Hicks (Texas)]

The VA should be (nothing is 100%) the most honest valuation available. If the VA appraiser comes in low, Tidewater must to be implemented and the lender has an opportunity to present sales data for a ROV. The VA appraisal should be the most unbiased valuation available. Buyers and sellers let emotions effect their opinions and their lack of knowledge of the appraisal profession does not help them in a debate. Price per foot only works with apples to apples (same size house, same size lot, same age, same upgrades). I hear price per foot all the time and they are comparing 1300 sf home psf to 2500 sf psf, a remodeled home to a non-remodeled home or homes with bigger lots or better locations.

 

[Hopeful2021Buyer]

UPDATE: The ROV came back yesterday at $260K which was a $23K upwards adjustment I am not sure if there is a 10% max limit the VA can adjust or not, but it's still nearly $20K below contract price.

At least at this range gives me some options. I *could* make up the shortage gap, but will get no support from the builder who went ballistic with the first appraisal and is planning to raise the price into the $290K's and go get a cash buyer if the deal falls through because that's what's been going on in our market in FL for most of the year. The only leverage I have is trying to avoid having to bring any additional funds to closing to cover closing costs as my initial $10K deposit should take care of that, but based on the timing of the projected closing in November, escrow is trying to take $3,500 as a prepaid for this year's property taxes when we know the tax bill is going to only be $250 for this year, but we're trying to get closing scheduled so that it will reflect the payment of this year's tax bill so nothing has to be prorated for 2021 and then I don't have to wait months for next year's escrow analysis to get the overage back (FL prop. tax bills are sent out in Nov and paid once a year).

Throwing down $20K is a tough pill to swallow. Not because I don't think the property isn't worth it but because this transaction takes most of the funds I banked from the sale of my home. But I keep searching for alternatives assuming I cancel the deal and get my initial $10K back and I can find literally nothing in FL (or the SE USA) for a 3/2 less than 2 year home around 2000sqft or less with hardwood floors and an established yard for less than $260K, so I worry about falling into the same issue if there are appraisers who will only use comparable data from 2020. It sucks I can afford homes well into the $300's but not confident they will pass appraisal.

But here's the real kicker. Apparently, the house being built for $275K right next to the house $280K I'm trying to buy is also under a VA loan and is also using the builder's preferred lender like me (both are 3/2 1720ish on 1/5 acre). My house was a few weeks ahead in the construction process since I was the first to go under contract, but the other one has caught up as all four homes in progress are being delayed for completion due to supply shortages in cabinets, countertops, etc. So, the VA Appraisal on that home (different appraiser) which is similar to mine except mine has more upgrades and quality fixtures was ordered a little over a week ago, and guess what? It came in at contract price! What's really funny is one of the comps used in support of the $275K was rejected by the person who appraised my house due to a difference in lot size, and the other 2 comps used were from September & August. So how does something like this happen? I emailed both the VA RLC & the appraiser of my house asking for explanation on how standards could be so far off and all I got back from the appraiser was "sorry, I can't help you". In my opinion, this feels grossly unfair and I'm looking into filing a complaint with whomever regulates appraisers in FL and contacting my Senators.

 

[ucbruin]

"The VA should be (nothing is 100%) the most honest valuation available."

An odd opinion regarding the appraisal industry in general....

 

[ucbruin]

@Hopeful2021Buyer

"So, the VA Appraisal on that home (different appraiser) which is similar to mine except mine has more upgrades and quality fixtures was ordered a little over a week ago, and guess what? It came in at contract price! What's really funny is one of the comps used in support of the $275K was rejected by the person who appraised my house due to a difference in lot size, and the other 2 comps used were from September & August. So how does something like this happen? I emailed both the VA RLC & the appraiser of my house asking for explanation on how standards could be so far off and all I got back from the appraiser was "sorry, I can't help you"."

Just playing devil's advocate....

In order to support your complaint will the buyer of the home "next door" to you and/or the buyer's lender provide you with a copy of that appraisal?
And will the builder provide you with a copy of the purchase and sale agreement including list of upgrades, etc.

 

[glenn walker]

@Hopeful2021Buyer

"So, the VA Appraisal on that home (different appraiser) which is similar to mine except mine has more upgrades and quality fixtures was ordered a little over a week ago, and guess what? It came in at contract price! What's really funny is one of the comps used in support of the $275K was rejected by the person who appraised my house due to a difference in lot size, and the other 2 comps used were from September & August. So how does something like this happen? I emailed both the VA RLC & the appraiser of my house asking for explanation on how standards could be so far off and all I got back from the appraiser was "sorry, I can't help you"."

Just playing devil's advocate....

In order to support your complaint will the buyer of the home "next door" to you and/or the buyer's lender provide you with a copy of that appraisal?
And will the builder provide you with a copy of the purchase and sale agreement including list of upgrades, etc.

I think you better pony up and be done because that budilder will find another buyer at a higher price or go look to see if there are any cheap trailer parks to live in : )

 

[Salty]

I know nothing about Florida real estate but in Philly area I very very rarely adjust for lot size. Especially now. I have never been able to credible quantify how much value is added due to a larger lot that is not sub-dividable as it is just a larger yard. I mean the textbooks do it but is is laughable as it is not reality. I am also an agent. Buyers are simply not paying more for a larger yard. They just want a good school district. As long as there is a reasonably flat rear yard size is just not an issue to the "typical" buyer here. I cringe every time I see a lot size adjustment here. Its like the stupid fireplace adjustment. My point is, I may have used the sale your appraiser did not use. Demand is so strong buyers are willing to pay the same amount for a smaller lot as a larger lot. They just need a house.

 

[glenn walker]

I know nothing about Florida real estate but in Philly area I very very rarely adjust for lot size. Especially now. I have never been able to credible quantify how much value is added due to a larger lot that is not sub-dividable as it is just a larger yard. I mean the textbooks do it but is is laughable as it is not reality. I am also an agent. Buyers are simply not paying more for a larger yard. They just want a good school district. As long as there is a reasonably flat rear yard size is just not an issue to the "typical" buyer here. I cringe every time I see a lot size adjustment here. Its like the stupid fireplace adjustment. My point is, I may have used the sale your appraiser did not use. Demand is so strong buyers are willing to pay the same amount for a smaller lot as a larger lot. They just need a house.

The same out here plus some people want less yard work : )

 

[Hopeful2021Buyer]

The same out here plus some people want less yard work : )

that's why I sold my last home. It was on 0.41 acre, but the builder only cleared 30 feet beyond the back of the house and it sloped down so was pretty unusable. I didn't think it would be a big thing but when I saw my neighbors had cleared out their yard I felt I should do the same. Someone recommended an individual in Gainesville who charged me $1,600 to clear the entire area of brush, trash pines, etc. It was well worth the price based on the bushhog quotes I got, but then there was the issue of the remaining wood chips which stunted any grass growth. So I found a contractor on Angie that offered to remove the bulk for $400 which was an amazing price and he quickly realized he had underbid the amount of work needed. Then grass started growing but it died with the season and still wasn't usable. I tried a hyrdoseeding company that charged $900 to do the whole yard but unfortunately it coincided with nearly a month of no rain and I did not have an irrigation system, but did my best to water but the results were mixed. Ultimately, what really frustrated me was when I tried to get fencing quotes. My lot was rectangularly shaped and long in the back (nearly 350 linear feet). Quotes for chain link started at $6500, vinyl was $9K, and aluminum which is what I really wanted to match the brick was almost $11K. I didn't want to fence until I got the yard situation taken care of but the project proved too large. The guy who bought my house was coming from MD and really wanted the land and was ready to sod/fence it all in. I drove by the last week when checking the new house and he did a lot of good work on it.

As for the new build, the smaller yard was a plus to me. First it was only on 0.20 acre but the entire lot is fully sodded/irrigated. Vinyl fences are required, but as the builder has been building along the border with the retirement community next to the new development, they've been putting up the vinyl fence in the back of the lots so buyers just have to worry about the sides/entrances, and since I already would have one neighbor on one side that has already put up their fence side I'd just have to worry about the other side and there's already a projected buyer coming in so it would be easy to negotiate/split the cost. And the grass/landscaping looks amazing as I think everyone uses the same landscaper and the common areas are maintained by the HOA fees. The other great thing is no well/septic which is common in the area as the development is able to hook up to county water/sewer via the retirement community's link.