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Can I Ask For Your Opinion

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Zpof1989

Freshman Member
Joined
Dec 3, 2016
Professional Status
General Public
State
Michigan
Good Morning all,

I'm currently in the process of buying a home that is a bi-level on a foundation, no portions are below grade, and it does have a built-in garage. The bank ordered the appraisal and it came back low so the bank then stated that they wanted to order a second appraisal to make sure the first was doing his due diligence. The second appraisal did come back at contract price but I have my concerns.

The home is set up like this
picture-uh=24d0be88ced30f75a2a4eb72885b1aa-ps=4eec853db1333ff1fa864fa70bcb9c4-600-Spruce-St-Bay-City-MI-48706.jpg


The garage and lower right side of the home are all level above grade and the top left and top right are on a level. When entering the front entrance door, there is a landing with stairs that lead to the upper level and stairs that lead to the lower level. The first appraiser described it as a DT2 1.5 Story ranch and used DT1 Ranch homes in the city where it is located as comparables. The second appraiser described it as a DT3 Split-Level and used tri-level homes with the lower area below grade in the neighboring township to compare to this home. I know that it depends on the market whether or not tri-level's lower levels are included in the GLA.

My question's are, is it acceptable to consider it a DT3? Does considering it a DT3 make any difference when it comes to adjustments and price? I'm just trying to protect myself since both appraiser used different markets and different houses to come up with different prices.

Thank you in advance!
Z
 

JTip

Elite Member
Joined
Oct 12, 2004
Professional Status
Certified Residential Appraiser
State
Pennsylvania
That is not a DT3.

Hope you didn't overpay......
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
I doubt "what you call it" will make a big difference in how you appraise it. The thing about split entries and tri-levels is "your always going up and down." The market likes single level ranches and contemporaries best, two levels houses next, and multi-levels least. If the appraiser compared you with other multi-levels, then he found the bettter comps. I'm a little unsure what your concern is. Do you think the first appraiser came in low and was more right than the second appraiser who made value?
 

miktay

Senior Member
Joined
Jul 3, 2007
Professional Status
Certified Residential Appraiser
State
Texas
I'm confused about one thing.
When you say "the appraisal came back low", does that mean that the appraised value did not match the contract price?
 

Zpof1989

Freshman Member
Joined
Dec 3, 2016
Professional Status
General Public
State
Michigan
I wasn't sure if there were guidelines that determine which comparable's are used based on # of stories/levels. All information on the home listed it as a 2 story or bi-level so I just found it odd that they described it as a DT3 split level. I wasn't sure if it was listed as a DT2 if it could be compared to tri-levels or if the number of stories or levels matters in what you can compare it too.
 

Zpof1989

Freshman Member
Joined
Dec 3, 2016
Professional Status
General Public
State
Michigan
I'm confused about one thing.
When you say "the appraisal came back low", does that mean that the appraised value did not match the contract price?

The first appraisal came back $12,000 below contract price. The Second appraisal came in $100 above contract.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Good Morning all,

I'm currently in the process of buying a home that is a bi-level on a foundation, no portions are below grade, and it does have a built-in garage. The bank ordered the appraisal and it came back low so the bank then stated that they wanted to order a second appraisal to make sure the first was doing his due diligence. The second appraisal did come back at contract price but I have my concerns.

The home is set up like this
picture-uh=24d0be88ced30f75a2a4eb72885b1aa-ps=4eec853db1333ff1fa864fa70bcb9c4-600-Spruce-St-Bay-City-MI-48706.jpg


The garage and lower right side of the home are all level above grade and the top left and top right are on a level. When entering the front entrance door, there is a landing with stairs that lead to the upper level and stairs that lead to the lower level. The first appraiser described it as a DT2 1.5 Story ranch and used DT1 Ranch homes in the city where it is located as comparables. The second appraiser described it as a DT3 Split-Level and used tri-level homes with the lower area below grade in the neighboring township to compare to this home. I know that it depends on the market whether or not tri-level's lower levels are included in the GLA.

My question's are, is it acceptable to consider it a DT3? Does considering it a DT3 make any difference when it comes to adjustments and price? I'm just trying to protect myself since both appraiser used different markets and different houses to come up with different prices.Thank you in advance!
Z

First of all, there regulations in place that lenders/banks are NOT supposed to go "appraiser shopping"...that is , order a alternate appraisals simply because the first appraisal came in "low" ( below SC price). There are reasons where they can order a second appraisal, such as if the first appraiser made a material error. But the bank making an excuse about "due diligence": Is BS. They went appraiser shopping and found one to make value. Which are grounds to report this lender to your state banking commission, and state attorney general.

What either appraiser calls the home is of little importance. What concerns me about the second appraisal is the appraiser went outside the city where it is located (where first appraiser stayed), and went instead to a neighboring township, where it could be the homes sell for higher prices. I wonder if your RE agent was involved, and if they recommended the second appraiser be used ( RE agents can have pocket pet appraisers who come in at SC prices as their go to person )

There are issues here and I would consider filing a complaint about this lender, find out if RE agent was involved, and sounds more reliable (imo), to rely on the first appraisal. I and nobody else on the board has seen either of course, but it is a known trick for appraisers who want to push value to ignore comps near a subject and go to a superior area and bring in higher price sales to make a value higher than it should be if they used the more similar sales.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
First of all, there regulations in place that lenders/banks are NOT supposed to go "appraiser shopping"....

Doesn't sound like they were "appraiser shopping." Just wanted a second opinion. I'm doing one now where the bank and buyer are getting two appraisals.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Can, there are specific regulations for lenders against appraiser shopping/ value shopping for the purpose of getting a higher value when first appraisal did not make a target value. Which sounds like this was the case. .

There are situations where from the outset of assignment, a bank orders two appraisals, such as high end properties or FHA flips. And if a buyer orders their own appraisal and a bank orders their own appraisal, that is a different situation as well.

Q8 references it below

Q8. Does Section II specifically prohibit a lender from ordering a second appraisal? No. Section II only prohibits a lender from ordering a second appraisal when they are attempting to influence the outcome of the first appraisal and are now “value-shopping.” As a risk control measure for certain loan products, it may be common for a lender to order more than one appraisal, and this section does not prohibit that practice.

(the link does not work but one can look it up under the below)
https://www.fanniemae.com/content/FAQ/appraiser-independence-requirements-faqs.pdf
 

BRCJR

Elite Member
Gold Supporting Member
Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
Before ordering a second appraisal the lender should provide evidence, to the original Appraiser, the work product as presented is flawed.

From a regulatory standpoint, there should be evidence the lender followed some reasonable protocol regarding the issues with the first appraisal.

Doing so, following a reasonable protocol, assists in answering the question of appraisal shopping or not.
 
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