Help! Appraisal came in $100,000 too low!

[Webbed Feet]

Actually, the two comps that are only list prices have adjusted comp values of only $512,260 and 510,400. They are two of the furthest away and one of them was listed as being in only "Average" condition throughout whereas our house was listed as being in "Good" condition throughout. I'd be thrilled if these two were replaced because I do not think they are nearly as nice as my house, but I still have the problem that nobody here is addressing: How can you use six comps and yet come up with a value that is exactly the same as the very lowest one?

Quite easy, because that is the appraiser's opinion.

By definition, none of the other comps were given any weight at all. If you detect anger, this is why. I just wish someone would come out and say either, yes he can use only one comp, or no, he has to give other comps some weight, and how you determine how the comps are weighted.

Yes, he can use only one comp for his final opinion of value regardless of how many others were included in the report. The comps are "weighted" (that is a measurement involving gravity and mass. Personally, I "weigh" comps. Past tense "weighed.") as the appraiser said they were in the report.

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I appreciate all the constructive comments that all of you have provided, but am frustrated (mostly with my appraiser, loan officer, and AAG) that nobody will tell me what the weighting guidelines are.

The "guidelines" are the appraiser weighs the comparable as the appraiser sees fit to do so and then explains what the appraiser did and did not do, and why in the addendum.

I am hoping that someone here will give me the straight answer to the questions: How much weight can one comp get, and why isn't the closest and most similar house the highest weighted comp?

One comp might get 100% of the consideration. Another comp might get none at all. Or some other division between the comps may be used as deemed needed by the appraiser. There is no rule for it. The answer to why the closest proximity comps were not weighed more, and if the appraiser deems them to be "most similar" or not should be in the appraisal report addendum. If those things are not in the addendum, then you should hire an appraiser to review that report in order to tell you if it is a good report or if it is not credible as you claim. If you are as upset as you seem to be, then spending $X00 for that service should not bother you too much.

Again, we cannot review this report in a forum thread for you. Nor can we teach you in one thread what we know. Did anyone mention you should consider hiring a local appraiser to review that report? Or simply go apply for a loan somewhere else? :new_smile-l:

 

[TN Pro]

How about posting the report.

 

[TJSum]

OK,
Let's forget about this particular case. Are there any rules that state how many comps are used and how much weight any one comp can get?

Current lending clients want at least three closed sales and two active or pending listings. So the typical assignment would have a minimum of five right how. Each lender however does have different requirements, so this is just a general rule. It is up to the appraiser on how to weigh the comps, however the thought process behind this weighing should be explained thoroughly. My typical appraisals since the crash have 7-9 comps with several receiving strong weight, typically I do not hang my hat on just one comp. Seriously, hire a good local appraiser to conduct a field review for you if you truly feel your report is off base, or start all over with a small local lender who will give you better service and will have their own rotation of local appraisers who know the market most likely. Rates are stable or declining, so starting anew might even get you a better interest rate.

 

[Mary Tiernan]

It seems to me the report should clearly outline which comparable sale was given the most weight and why. Have you read all the Comments to Sales Comparison?

 

[Dutchman]

Since the two lowest comparables are lisitngs and the list price is being used, consider the following. The principle of substitution says that a buyer will not pay more for a property if a similar property can be obtained for the same or less money. Also the fact that the possibility exists that the contract prices in your neighborhood are a certain percentage below the asking prices (LOL). The possible reasoning the appraiser might have used is the fact that for a certain percentage of the asking price, a similar property could be bought. Although because of certain factors involving your property, he holds the opinion that your house maybe an improvement over the listings, by the time they sell they will contract at a lower price then listed based on the market. Ipso facto, a value that is the same as the lowest price listing is in reality a value higher than the listing price that was used

 

[TheXman]

OK, here is what the report says about weighing comps:
"All sales are competing homes from the same market. They are confirmed as closed sales as noted above. All of the comps are given weight in
the approach to value, with the most recent comps most heavily weighted. All adjustments are typical and based upon buyer behavior in this
market. Adjustments also based on MLS comments.
Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting
conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is
$510,000 as of 10/04/2010, which is the date of inspection and the effective date of this appraisal."

Just so you have the facts about values and sale dates, here are the sale dates and adjusted comp values for all six comps:
#1 sold on 7-28-10, adj. value: $524,575
#2 sold on 7-22-10, adj. value: $544,075
#3 sold on 6-25-10, adj. value: $510,000
#4 sold on 5-14-10, adj. value: $563,845
#5 active listing, adj. value: $512,260
#6 active listing, adj. value: $510,400.
There you go, he says he gives the most recent comps more weight and yet somehow, our house is still valued at exactly at the same price as the lowest valued (and second oldest comp). Now, will somebody please believe me when I say that this guy screwed up and did not weigh the comps in the manner stated in the report? I don't think it's asking too much for someone to admit that there is an error and say that it should be corrected.

 

[TheXman]

Its obvious by the way you write you are not an idiot, however you are making some very serious claims against an appraiser who is going out and doing his job. What does he have to gain by bringing your house in short. He went out and did his job, less face it you just dont like the value he came in at, many people dont. Is it possible that your house is not worth what you think it is? is it possible that when he reconciled his value he stayed on the lower side due to other apparent market forces that may be in play in your area?

He listed current market conditions as stable and nowhere in the report does it say that the value was lowered or kept on the low side for any reason. He did, in fact state that the inventory of homes on the market was declining, which should work in my favor, if anything. People make mistakes, more often that we'd like to believe. I'm pretty good with numbers and understand distributional patterns, so when the value of my house (which is completely remodeled and in very good repair) comes in at the exact same price as the very lowest comp, that raises a red flag to me. It's too obviously skewed to the downside to ignore.

 

[Mike Plumlee]

If this is the complete reconciliation statement, the appraisal does not specifically give reasoning for the weighting one way or another. It uses a blanket statement that "all comps are given weight", which really doesn't tell you or us the logic we need. We're all left to infer that the four sales are given equal weight. You're right, it doesn't provide support for an opinion on the low end of the adjusted range.

It's also interesting that the opinion of value (OOV) is less than the adjusted values of both of the listings. Interesting only in the respect that some lenders refuse to accept a report where the OOV is greater than the listings adjusted value without adequate explanation. Could be just coincidental.

Concerning the four sold comps - what was the range of the unadjusted sales prices? Or you could just list them.

 

[Smokey Bear]

When you refer to the 'lowest com' are you talking about the sale price or the ADJUSTED sale price?

 

[TheXman]

When you refer to the 'lowest com' are you talking about the sale price or the ADJUSTED sale price?

The prices listed above are the adjusted prices. Only one of the comps listed was larger than ours, all the rest were smaller, and our house was completely remodeled in 2001, so significant upward adjustments were necessary in most cases.