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Difficulty Dealing With Appraiser

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Gary Fisher

Freshman Member
Joined
Aug 12, 2003
Recently we decided to sell our home which is just over one year old and located in a new neighborhood that does not have many re-sales in it because the builder was still selling there up until three months ago. Anyway, we put the house up for sale and got an acceptable sales offer from a buyer. The buyer is getting a mortgage and consequently got an appraisal done to acquire the loan. The appraisal came back at $5,000 less than what the buyer offered to pay for the house. We understand that market conditions affect the appraisal amount, however there are several significant discrepancies in the other houses that the appraiser used as comparables and he refuses to discuss these matters with our realtor. The houses used as comparables for the appraisal are either stripped new houses which contain no upgraded options (our house has many significant upgraded features like hardwood flooring, granite counter tops, built-in media center, etc.), or they are older houses that have entirely different floor plans and features. Our realtor said that the appraiser should be able to adjust his appraisal by 10% (+/-) to reflect upgraded features found in our house that are not included in the comparables. Unfortunately, the appraiser is difficult to deal with and refuses to discuss any matters with our realtor. What can we do about this? As it stands right now, the buyer will only qualify for the mortgage for $5,000 less than what the contract price is. Yes, we could simply lower our price so that the loan will go through, however we strongly feel that our home is worth much more than what the appraisal says. If we wish to challenge this appraisal, what course of action can we take to do this?
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Unfortunately, the appraiser is difficult to deal with and refuses to discuss any matters with our realtor.
Without his/her client’s permission (the lender), the appraiser is forbidden to discuss the report with anyone other than their client. The lender is the appraiser’s client, not the borrower. Now it does depend on his/her attitude, but if my CLIENT ask me to review some data from the agent, I'd be likely to consider it. However, with the access to MLS, online data, and many other sources I use, generally ........ I find it very unlikely that the agent will provide something that I have not already considered. But the request needs to start with the lender, the appraiser's client.

Our realtor said that the appraiser should be able to adjust his appraisal by 10% (+/-) to reflect upgraded features found in our house that are not included in the comparables.
Well, once the appraiser has the clients permission to discuss relevant facts of the report, with the agent, have your agent provide market data, and factual support, for their opinion. No one is perfect, and the agent may have some information that may help. But like I noted above, it may have already been considered. Also, most appraisers, including me, will not talk to any agent that just wants to fuss and whine. If you want to talk facts, send me your support data. Whiners will only be offered some cheese.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Your question actually touches on two issues. The appraisal of the property itself, and the appraiser's conduct with respect to dealing with his client's borrowers.

If your broker has the data to support the contract price, they should submit it to the lender and ask them to consider it. How the lender does that is up to them; but it will probably affect their future relationship with the broker, who is the source of that business. The lender wants to do business and make loans, but they don't want to make just any loanl, they want to make good loans.

The lender may choose to forward the original appraisal and the extra data to a review appraiser for an independent 2nd opinion; the lender may forward the data to the original appraiser and tell them to consider it; or the lender may simply decline because the original appraisal was that convincing. What the lender does may very well depend on how confident and comfortable they are with the appraiser's work.

The original appraiser may not be the most charming or entertaining personality to deal with, but that doesn't excuse any rude or unprofessional conduct on their part. One the client gives the appraiser permission to deal with you or your broker directly on this, there is no reason for them not to do so in a professional manner. That professional manner does not require the appraiser to rehash the same old data to get a desired result, but they should at least be prepared to justify why the data they used and how they used it is appropriate under the circumstances.

The one thing that puzzles me is the difference between the sale price and the appraised value. $5,000 isn't very much to fall short by when it comes to an appraisal of an almost new home. Particularly one with upgrades. Most appraisers I know wouldn't presume to be so accurate in their work to justify such a minor difference, unless they felt they were already stretched to the utmost outer limits of value and could go not one inch farther without compromising their professional ethics and their license.

Regardless, the appraiser's opinion of value is their opinion. The lender engaged the appraiser to get that opinion. How they make their loan decision is a separate, albeit related, issue. The lender could always choose to raise their loan-to-value ratio in this case and offer that maximum loan. Or, the buyer can come up with the extra $5k because they know better than the appraiser. Or the seller and buyer can renegotiate.

One other option is to get another opinion in the form of a new appraisal by a different appraiser. Be careful what you wish for, though. That opinion might turn out to be lower than the first one. It's been my experience that many brokers develop their opinions of value in a completely different manner than how an appraisal works. Your broker's opinion may, in fact, be way overstated. It's possible.
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
I think George, as usual, has given you good advice and looked at it with an open mind. I would just stress that Appraisers were recently included in the Privacy Laws as if we were banks. So as has been said your Realtor is not the Appraisers client so he can not discuss it with her/him without permission.

Also, many Realtors talk a good line but have no fact's to back them up. At least that is my experience. When pushed and the Realtors furnish me sales they are RARELY properties that are comparable and would compete against the home I appraised. They are usually only similar in that they sold for a price in-line with what the Realtor thinks I should have appraised the home for.

There are exceptions to this rule and some really good Realtors out there but I don't think most Realtors have a clue about how a value is arrived at in an appraisal. Their trained in selling, not valuing Real Estate.

Originally posted by Gary Fisher@Aug 12 2003, 10:14 AM
If we wish to challenge this appraisal, what course of action can we take to do this?

To answer this question, you have to deal with the lender. I don't see how you can challenge the appraiser since he was not working for you. If you want to pay to have another one done or have the Appraisal reviewed at your expense AND IF the lender would allow it would be about your only option. But it is the lenders money and your not the lenders client either. They have control over who they use to determine if they want to lend their money.

I don't mean for this to sound like I am defending the Appraiser or being negative. Just as a seller I don't see much recourse for you.
 

BenLuby

Senior Member
Joined
May 28, 2002
Professional Status
Certified Residential Appraiser
State
Georgia
Five thousand dollars could be insignificant, or it could be a larg sum of money, depending on the price of the property. A 300k home, a 5k adjustment is not really a major issue. A 120k home, it could be a back breaker.

George, as usual, nailed it on the head. The appraisal, with none of us seeing it nor having more information, can really make an informed input. All our comments are pure speculation. Good luck.
 

Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
Or, the borrower/purchaser can pony up the other $5,000 at closing to get the deal done........It's all a matter of how much they want the house, or how bad you wanna sell it......You can always put it back up on the market, and their offer goes away.........If they can't get their mortgage, then you can pull out of the contract - Just go find another buyer......If the house is really worth it, it won't be a problem.......
 

Gary Fisher

Freshman Member
Joined
Aug 12, 2003
[QUOTE: you have to deal with the lender. I don't see how you can challenge the appraiser since he was not working for you.]

Thanks very much for all the information, I really do appreciate your advice. At this point the problem lies with the buyers lender (an ultra conservative credit union). We asked if we could get another appraisal done by an independent appraiser, paid for by us, however the lender will not allow it. They will only go with the original appraisal and will not budge on the loan amount, which is ridiculous considering the sales price. When we listed the house for sale two months ago we had three different Realtors provide us with "comparable sales estimates" for the neighborhood. All three estimates supported our sales price. Considering how fast we got a contract on the house, that also tells us that it's priced appropriately for the market. I guess our battle is with the credit union at this point. Wish us luck.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I assume the loan is a conventional loan based on your comment about a credit union. If so, perhaps the borrower can go to a different lender and get another appraisal. That is one possibility.

Would be interesting to know the following:

1. How long have you been in the property?
2. What were the total dollar values of the upgrades when you bought? Could be the property is a super adequacy or over improvement for the area.
3. Has there been any substantial change in the market since you purchased?
4. What was your offering price, contract amount, and what value did the appraiser conclude?

Underwriters have a prerogative to raise a value in some cases up to 2%. Has this been ask for?

Could you and the buyer split the difference, you lower the price by $2,500 and them putting an additional $2,500 down?
 

Atlanta CG

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Give him a $5,000 second mortgage for a short period and offer to pay for another appraisal to confirm your and his/her opoinion of value.
 

Rich Hahn

Senior Member
Joined
May 2, 2003
Professional Status
General Public
State
Colorado
I think if you got a "contract" that fast perhaps you sold your house tooo cheap.
Keep it listed and hold out for your listing price. It may take another year to sell it but everyone will sleep at night. Sounds like the appraiser has done his/her job. Leave him/her alone. Its your problem now. Bank has done due diligence and hired a professional.
 
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