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FHA Portability

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Paper A Sir

Sophomore Member
Joined
Jun 6, 2006
Professional Status
Licensed Appraiser
State
Texas
FHA order. New construction. Got comps from MLS. Got comps from builder. Asked builder if there had been any recent price increases. Answered no. Value came in low ($3,000 low on a $200,000 house).

The AMC comes back a few weeks later and asked me to reconsider based on a sale that occurred after the effective date. I told them I could not as it is outside of the scope of work. They then suggested that I do a new appraisal with a new effective date which would include said sale. I told them that FHA orders are portable and unalterable. Therefore, a new appraisal would not be valid. I also told them that I was not interested. They are pressing the issue. As I understand it the case number is tied to that property for six months (?). Am I wrong about that?
 

Rob Frazier

Sophomore Member
Joined
Jul 6, 2005
Professional Status
Certified General Appraiser
State
Maryland
IF the UNDERWRITER believes that the appraiser should reconsider the value opinion based on information avaialbe and valid as of the date of appraisal, then the appraiser needs to take another look and make sure he/she has considered all relevant facts to produce an unbiased value opinion.

The FHA appraisal is valid for 120 after the date of valuation. It can be extended for another 120 days IF the mortgagee orders an update of appraisal BEFORE the current appraisal expires. If the AMC wants you to perform another assignment and provide another appraisal within the validity period just to get a higher value, then that would not be appropriate.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Wow... $3,000 on a $200,000 property. You must be really, really good. My comfort level is usually 3% to 5%. You certainly can stick to your guns on this one; however, you also could look at the data again.

I've only been doing this for 30+ years and have had my share of appraisals that didn't support a contract price. That said, your case sounds like one where there might be room for a reconsideration. I wish you well.
 

graindart

Junior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Montana
Wow... $3,000 on a $200,000 property. You must be really, really good. My comfort level is usually 3% to 5%. You certainly can stick to your guns on this one; however, you also could look at the data again.

When I have appraisals where the value comes in below the contract price by a few thousand, it's usually because the range of indicated values just doesn't go as high as the contract and I'm already weighting it on the upper side. Someone could argue that the appraiser should just reconsider if the opinion of value is $197k on a $200k contract. But if it's like has happened to me several times, the indicated value range is probably $180k-$197k and the appraiser weighted it on the upper end for whatever reasons. Just looking at the one number gives you one perspective, while looking at the indicated range gives you another. If it would've been weighted on the lower end of the range, no one would be thinking the appraiser should reconsider if $180k should just be changed to $200k.

I don't think the appraiser should reconsider and look at the data again to see if they can squeeze an extra $3k of "value" out of it just so a deal can go through. Why can't the lender just change the down payment requirement from 20% to 19% or whatever it would take to make the deal work?
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Or, why can't the contract price be lowered to the appraised value? I appreciate your point of view and IF the appraiser already trended to the higher end of the value range then your point is certainly valid. My contention is ..."is the appraiser so good that he/she can determine a value within 1.5%". I think that might be what the underwriter is looking too.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
Sounds like $195,000 would have been the logical number not $197,000 **Just Saying !
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
It looks like values are increasing in the area if there is a sale that sold after the effective date of the appraisal. The OP should have considered the pending sale in his/her analysis. Was the market reported to be stable or increasing?
 

Kitarkus

Junior Member
Joined
Nov 15, 2006
Professional Status
Certified Residential Appraiser
State
Kansas
Wow... $3,000 on a $200,000 property. You must be really, really good. My comfort level is usually 3% to 5%. You certainly can stick to your guns on this one; however, you also could look at the data again.

I've only been doing this for 30+ years and have had my share of appraisals that didn't support a contract price. That said, your case sounds like one where there might be room for a reconsideration. I wish you well.

I hear you...I'm not 'that good' either. Sometimes, however, the value simply is NOT there. These days it is not uncommon for me to be a few grand short on a purchase appraisal assignment. If my comps are already 'top of the market' and I have no supportive data....it is what it is. I detest when this occurs....because I agree...I'm not 'that good'. I do, however, need data to hang my proverbial 'hat' relating to my value opinion. Without at least SOME anchor to support the higher than typical value....I'm not going to explain to my state licensing board "I'm not that good"
 

Kitarkus

Junior Member
Joined
Nov 15, 2006
Professional Status
Certified Residential Appraiser
State
Kansas
Or, why can't the contract price be lowered to the appraised value? I appreciate your point of view and IF the appraiser already trended to the higher end of the value range then your point is certainly valid. My contention is ..."is the appraiser so good that he/she can determine a value within 1.5%". I think that might be what the underwriter is looking too.

Exactly. Contrary to popular opinion....values within a market don't rise because it is the Appraiser's job to increase them. If this Buyer is so cash poor that he cannot come up with $3K to close a deal that he feels is truly fair.....then this is not an appraisal problem imo.

Once he closes with $3k 'skin in the game'....the Appraisers have a new 'market making' comparable sale from which support for the next transaction can be substantiated.
 
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