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Appraiser a blockhead-Bankrate.com

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john snyder

Thread Starter
Senior Member
Joined
Jul 27, 2002
Professional Status
Certified General Appraiser
State
Michigan
From Bankrate.com

'APPRAISAL: A reader named Suresh has a question about an appraisal. He paid $600 to lock a good rate on a refinance. Then the bank hired an appraiser. "I received a copy of the appraisal, and it was off by $30,000 as compared to the recent (2008) city assessment," Suresh writes. "When I spoke to the person regarding this, he was saying that he had already done a good job and his estimate is the final, with no consideration to the upgrades that I have in my house."

Suresh adds that his house has upgrades that comparable houses in the neighborhood don't have, but that the appraiser told him that the upgrades don't matter. The upshot: "I either stand to lose the $600 or the rate I negotiated if I don't pay more to buy down the mortgage," he writes. "When I initiated the process, it was based on the last two years' city estimate, and this new estimate is cutting deeply into the city's assessment." He says the appraisal is unfair and wants to know if I think so, too.

I don't.

Not being privy to all the details, including where the house is, I tend toward the default position of believing the appraiser. By endangering this refinancing deal, the appraiser isn't necessarily endearing himself to the loan officer, so it's not like he's doing this to enhance his job prospects during a recession. My advice to Suresh is to assume that the appraiser has integrity and competence. Not exactly what Suresh wants to hear, but there it is.

As far as believing the city assessor over the appraiser -- well, I frequently hear from enraged readers who believe that their city and county assessors are numskulls who habitually overvalue property. Perhaps that's the case here. Also, government assessments tend to be tricky to interpret, anyway.

About upgrades: They seldom add more value than they cost. Sometimes upgrades don't add any value at all -- swimming pools are the best example. The appraiser is right when he says that the house is worth what an informed buyer would pay for it. Things like expensive countertops and flooring don't influence price much."

I do not necessarily agree with the last paragraph, still good to see some reasonable thought in this type of economy by a national contact.

john snyder
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
The borrower should have made a list of ALL the upgrades to hand to the appraiser. Then he could have looked specifically at them. Otherwise, how was he to know what was standard and what was an upgrade? It may not have made a difference anyway, however.

It would be like going to the doctor and just tell him you are sick.....not telling of the symptoms.
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
He says the appraisal is unfair and wants to know if I think so, too.
Fairness, vis-a-vis, tax assessments or anything else is not an Intended Use of the appraisal in a refinance.


The Intended Use, as described in the report, is for "lending consideration" by the Intended User. No other use is implied or intended by the author.

To get into a piecemeal appraisal justification based of the report to another value opinion or any other use of the value opinion contained in the report other than was clearly stated as the Intended Use is counter productive to good appraisal practice and not justifiable unless the appraiser has so much time on his hands that he/she needs the intellectual stimulus.

The simplest way to handle something like this where someone, other than the Intended User, is challenging the report based on comparison with a tax assessment, a brokers opinion or whatever, is to tell them that the report is a Summary Report containing all of the justification required for the value opinion contained in the report based on the assignment conditions. And then leave it at that. Remember that the assessors estimate of value or a brokers market opinion are not arrived at based on compliance with USPAP or the specific assignment conditions. Another way of saying it that I have found helpful is to say that Yugo's and Honda's are both cars but the results of the whole manufacturing process is different based on the market strategy, engineering expertise, quality of materials and manufacturing ability of the individual car companies. The same with appraisals, assessors estimates of value and broker price opinions. All are for different purposes with different reasons for being and different levels of competence in execution.

People who make a hew and cry about reports don't really want to hear your side of anything; what they want to do is prove you wrong and their position right. In this case, the issue is really not the quality of the report; the issue is the $600 spent based on the belief that the assessor's value was correct. Such exchanges seldom resolve anything.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
it was off by $30,000 as compared to the recent (2008) city assessment,"

Assessment may or may not have utilized the most RECENT sales data
 

Smokey Bear

Elite Member
Joined
Dec 8, 2004
Professional Status
Certified Residential Appraiser
State
California
Why is the appraiser discussing the appraisal with the borrower?
 

tjcou812

Junior Member
Joined
Aug 17, 2007
Professional Status
Certified Residential Appraiser
State
Connecticut
I had my reval. done by the city right after the refi boom and the prices of home values sky rocketing. The market was in the biginning stages of the declining market. Because values went up so did my assessment and taxes. I don't know of other states but the State of Connecticut requires revaluations of homes every 5 years I think (it may me every 7 or 10 years not sure). So unless I fight city hall over the reval, i'm stuck with what the city has it assessed at. When you have a major swing in values as they have been the last couple of years. As Mike said "Assessments may or may not have utilized the most RECENT sales data. The assessment value that the appraiser and homeowner is using was probally assessed a few years ago.
 

Doug Meyer

Senior Member
Joined
Sep 13, 2003
Professional Status
Certified Residential Appraiser
State
Indiana
Indiana assessments are generally 2 years behind current market values. We are still seeing higher than normal assessments in our area. Also, we ask the homeowner for a complete list of improvements and updates and the year they were completed. We scan these items into our reports for the lender to see and for the homeowner to know that we considered the items presented to us. makes life easier for everyone and limited complaining by the borrower!!!
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
Don't forget the other test on opinions of value:

What is the definition of "Value" that is being used?

Unless everyone, including the assessor, is appraising to the same definition of Value, you are not talking apples to apples. Just because someone comes up with a number does not mean that it has any relationship someone else's number.

Be a Hard Butt on this issue of outside justification. :new_2gunsfiring_v1:
 

Riick

Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
but that the appraiser told him that the upgrades don't matter.
I'm sorry Mr. Homeowner, but I cannot talk to you about this; my customer is the Lender. If they have a problem with the report then they should contact me.
I cannot discuss the report with you.
.
 

jtinmichigan

Member
Joined
Feb 7, 2008
Professional Status
Certified Residential Appraiser
State
Michigan
In the OP it says the the subject house has upgrades that "other comparable houses in the neighborhood don't have". This may tell us that the subject is overbuilt for its neighborhood. (over upgraded?) (too updated?) Sorry, about your luck, Chuck.

"I put a $50,000 pool in at my house in my $40,000 neighborhood, of course its worth $90,000".
 
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