Comp Inspection

[riggsrobbie]

I need some advice. Went under contract on a home that I was flipping before I even listed it. The buyer's appraisal came in about $15,000 below the contract price; however, it had significant errors, and the appraiser did not appear to be competent with the area. I'm working with my buyers on a solution to the value, but wanted the opinion of this forum as to the errors in the report.

The appraiser did not drive by a single comp. The photos are from the tax assessor's website, the local MLS and one is even a google street view photo. The appraiser's sketch differs from a previous appraisal by 100 SF. The appraiser used the "zoning class" from the assessor's site and not the actual zoning. He referenced a different city in his report. Has across the board adjustments, and on and on. The appraiser's effective date was also incorrect in the report. The AMC, Service Link, made the appraiser fix some of these issues; however, the comp photos are now just different versions of MLS photos, Google, etc. The appraiser was also over a week late in turning in his report and charged my buyers $550 for his report.

My question is should I share this information with some agency, or let this go? I'm not the typical seller who is concerned about the value because we have worked out our deal with our buyers, but I'm having a hard time with this appraiser continuing to get work based on his lazy work ethic. I would prefer competent appraisers work in our area, especially as we continue to renovate properties.

Thanks in advance. Google street view photo attached.

 

[Terrel L. Shields]

My question is should I share this information with some agency, or let this go?

If for FHA or Fannie Mae, driving the comps is a requirement. A straight bank loan, not so. But if the appraiser certified on the cert pages that he did drive by and inspect, I would send it to the state with a complaint. "Value" is never an issue with a board but large errors or a series of errors that make the report misleading or not credible are sanction worthy items. Google the Georgia Appraisal board or this forum which has a list of state agencies somewhere.

 

[riggsrobbie]

If for FHA or Fannie Mae, driving the comps is a requirement. A straight bank loan, not so. But if the appraiser certified on the cert pages that he did drive by and inspect, I would send it to the state with a complaint. "Value" is never an issue with a board but large errors or a series of errors that make the report misleading or not credible are sanction worthy items. Google the Georgia Appraisal board or this forum which has a list of state agencies somewhere.

Thanks. It was an FHA report and I understand the requirement, especially since the appraiser was not from the area. Just wanted to make sure I wasn't being petty, or bitter and that this type of thing actually warranted a complaint. Also, the AMC said there weren't significant errors in the report. Should that be of concern?

 

[Terrel L. Shields]

The AMC won't know its fannie from a hole in the ground. They are just CYA themselves. Send a complaint to FHA about it. FHA might want to turn it in themselves. The Direct Endorsement Underwriter might reject the appraisal.

 

[Evincere]

T The AMC, Service Link, made the appraiser fix some of these issues; however, the comp photos are now just different versions of MLS photos, Google, etc. The appraiser was also over a week late in turning in his report and charged my buyers $550 for his report.

My question is should I share this information with some agency, or let this go? I'm not the typical seller who is concerned about the value because we have worked out our deal with our buyers, but I'm having a hard time with this appraiser continuing to get work based on his lazy work ethic. I would prefer competent appraisers work in our area, especially as we continue to renovate properties.

Thanks in advance. Google street view photo attached.

FYI. The AMC you mention by name - Service Link is the entity that charged your buyer $550 - not the Appraiser. The Appraiser most definately DID NOT receive a $550 fee. What the Appraiser received is anyone's guess. If you read/follow this forum a little closer or do a search you will find that this AMC is notorious for broadcasting their orders to many appraisers. You also mention that the Appraiser was a week late - being in the mortgage business you should be aware of the fact, if you are not already aware - that sometimes these orders sit for days or need to be repeatedly broadcasted (due to very low fees to the Appraiser) until an Appraiser accepts which may or may not account for the Appraisal being late.

http://appraisersforum.com/forums/threads/service-link.188403/

http://appraisersforum.com/forums/threads/anyone-have-experience-with-service-link.197419/

And therein lies some of the problems you mention regarding pictures. Yes, FHA requires actual photos but some Appraisers will foolishly cut corners and use MLS photos because of the low fees. There have been many controversial debates regarding the use of MLS photos and it usually comes down to SOW and a lenders requirements. I don't believe there is anyone here who will say they condone such conduct regarding FHA because those who do FHA work know (or should know) better than to mess with FHA.

 

[Elliott]

Riggs said, I'm not the typical seller who is concerned about the value because we have worked out our deal with our buyers, but I'm having a hard time with this appraiser continuing to get work based on his lazy work ethic. I would prefer competent appraisers work in our area, especially as we continue to renovate properties.

Just curious, so how much did you buy, put in, and sell for. I'm not sure you "know" he didn't drive the comparables. Did the "lazy" appraiser actually find the best, appropriate comparables? Just for you information, the appraiser is responsible to analyze the prior sale and explain why there is a difference between the last sale and the current purchase. Its not uncommon to have a hard time justifying the additional $15,000 in flip profit in a hot market.....the 'sales' just aren't there.

 

[gregb]

I need some advice.

The AMC, Service Link, made the appraiser fix some of these issues; however, the comp photos are now just different versions of MLS photos, Google, etc. The appraiser was also over a week late in turning in his report and charged my buyers $550 for his report.

A representative of Service Link will soon be with you.

 

[Artemis Fowl]

"Zoning Class"...ouch.
Good indication that there may be issues with competency.

 

[Bobby Bucks]

He referenced a different city in his report. The appraiser's effective date was also incorrect in the report. The AMC, Service Link, made the appraiser fix some of these issues; however, the comp photos are now just different versions of MLS photos, Google, etc. ]

This smacks of a cloned report, a sloppy cloned report at that. As GregB stated, a representative of the AMC will likely take notice. My guess is they will begin a witch hunt/investigation before the end of the day.

 

[hastalavista]

I recommend you first submit your issues (via the buyer) to the lender. Be factual and ask for a reconsideration of value. If you have alternative comparables that you think are better, submit them along with the request. Since you are in the business, I'll assume you know that "comparable sale" doesn't mean sales that sold for your contract price, but sales that are similar in the physical and locational characteristics of the home you are selling. As a rule, similar homes closer to the subject (proximity) are better than similar homes away from the subject (distant).

You indicate the appraiser was a week late on the appraisal. That may or may not be the appraiser's fault. You would not believe (or maybe you would) how many times agents write contracts with a 14-day appraisal contingency in a market where appraisals are taking 3-4 weeks (and, know that we don't get the order to appraise the house until several days after the contract is signed).

I do a lot of "flips" in my market (just finished one that is the "before"; H&BU is to sell to an investor who will renovate and flip it; I was able to interview just such an investor who did the same to a house down the street; purchased for $650k 3-months ago, active right now for $890k). Here is my experience: Unless the market is very hot, "flips" many times sell for slightly below what an owner-user who renovated their own home will sell for. This is because the investor will forecast the sell-price, as-renovated, to be at the lower end of the range to ensure a fast sale. If you are an investor/flipper, then you know (better than I) you make your money on the buy-end of the transaction.
It wouldn't surprise me if the report has similar "flipped" comparables, those might sell for slightly lower than non-flipped/similar-renovated homes.

Try this route first (reconsideration) and see where it goes.

Good luck!