Help! VA Appraisal came in $40K less

[Zoe]

One more question. Who is your mortgage lender?

 

[Zoe]

I'll go deeper. How much are your closing costs on this loan and who is paying them? Can you post the HUD 1 settlement statement? Or Good faith estimate?

I assume you have not closed. Can you give indications on good faith estimate and closing costs and who is paying what?

 

[KYLECODY]

I'll go deeper. How much are your closing costs on this loan and who is paying them? Can you post the HUD 1 settlement statement? Or Good faith estimate?

I assume you have not closed. Can you give indications on good faith estimate and closing costs and who is paying what?

Zoe, his deal is KIA(killed in action). Nothing left to do but complain.

 

[Zoe]

Hi All,
Hoping someone can calm me down as this week as been awful and I'm still livid after reading the VA appraisal report for the new construction home I was hoping to purchase, but not feeling confident that much is going to change after the ROV because, well, we're talking about the VA.

So here's the thing. I live in Ocala (Marion County 34476). Back in May I sold my own home (a 4/3 2282SF Brick beauty on a .41 lot) to someone on a VA loan that I was also able to help cover closing costs for them since the VA appraisal came in for higher than my listing price ($298K) and the market in our area was taking off. Because of this I didn't worry too much about when it came time for the VA appraisal on the new home I was trying to buy.

After losing out on several bids I started looking at new construction as there's a ton of it in the area known as "The SR 200 Triangle". This is easily the fastest growing area in Marion County and the housing craze has just accelerated it. My prior home was through Adams and I visited them, as well as DR Horton and new inventory was already booking up and they told me prices in the brochures were going to increase about $30-$40K once those homes were finally listed, and that's what pretty much has happened. My focus was around the 1600-2000SF homes where I could have a fenced in yard for the dog (my last house the lot was too large and the builder didn't clear the back lot and it became too much of a hassle to try to develop it so I let the next owner who wanted the extra land deal with it).

After searching I found a local reputable builder that was building in a newer one street development about 2 miles from my previous home. I signed a contract in May for $280K for a 1725SF 3/2 on .20 lot that had a lot of upgrades/fixtures, I believe I was the first person who got a crack at this new model so no bidding was involved, except I had to provide an earnest deposit. The home was projected to be due sometime around October, so after looking at some short-term rentals near where I work in Gainesville, I decided to ride it out in an extended stay hotel. That worked until football season started, but I managed to make it work for the time being as it still came in slightly cheaper.

Anyways, I got notice a couple weeks ago to submit the VA appraisal fee, which I did, and then yesterday my lender contacted me saying they needed me to provide a hardship letter to include with their additional comps to appeal the appraisal. I was a little surprised this had come in for less as I didn't bid up any prices and was certain from Zillow recent sales, pendings, and current listings, the contract price was more than fair. When I asked my lender what the appraised value came in at, my jaw nearly dropped: $237K. There is no way, I mean NO WAY, that is a accurate assessment of market value in this area. I'll gladly take help/assistance from any realtor who wants to help me find on Zillow a similar new home/new sqf/quality for just $135/sqft. in this area It ain't happening. Even the crappy Ocala Value home builders are charging $155 sqft for inferior work of a similar sized homes. The appraiser only included comps from 12/20 and older. They also listed the pricing trend for the area as "Stable" instead of "Increasing". Um, what?

Unfortunately I don't have an extra $40K to cover that shortfall and will have to walk if the ROV appeal fails. This seems really unfair as I can't fathom how anybody in my area will be able to secure a VA loan in this area if appraisals aren't going to reflect the rapid market changes. In just the past two months, there have been multiple sales of homes at $160-$180 per square foot of similar size, but less quality than the home I'm trying to buy. And I doubt after this ordeal the builder I'm trying to purchase from will want the hassle of dealing with the VA again. I can't even find decent rental homes in the Alachua, Marion, Levy, and Gilchrist areas for less than $2K and that's about the average price for a 2br/2ba rental with a pet in the apartments.

Really livid with this whole process and hoping another appraiser can chime in with why this would happen. Also, what is the success rate of ROV appeals? Looking online it doesn't seem very successful, but this just seems so egregious.

Your starting to upset me which is not hard. But you tell bits and pieces. Please reveal ROV with your lender and who your lender is. Please reveal what your closing costs are and who is paying them. Tell me if you are paying any down payment. Please reveal your discussion with VA.

 

[Hopeful2021Buyer]

Okay, report back. Have you been able to get an actual VA employee on phone? I can tell you how to do it. Once you get there ask for an appraiser.

No 2, your telling bits and pieces. Have you been able to discourse with the appraiser?

Tell me about the Reconsideration of value you did with your lender.

1. I've been able to email 3 POC's at the St Petersburg RLC. All of them have the same phone number in their email block and selecting option "6", but it rings 4 times and then disconnects, so no way to leave I message (I indicated as such in the email I sent them).

2. I included the appraiser on my initial inquiry to the VA and his reply was "sorry, I cannot help you".

 

[Zoe]

Zoe, his deal is KIA(killed in action). Nothing left to do but complain.

I am very patient most of the time. I would say 51% of time. LOL

 

[Hopeful2021Buyer]

I'll go deeper. How much are your closing costs on this loan and who is paying them? Can you post the HUD 1 settlement statement? Or Good faith estimate?

I assume you have not closed. Can you give indications on good faith estimate and closing costs and who is paying what?

I used the builder's preferred lender.

I pay all the closing costs except the seller would have paid the taxes with the deed transfer (about $2K) and paying the owner's title policy (around $1,500) which is customary in FL.

Closing costs would have been around $10K not including the VA Funding fee of $10,76 which would be rolled up into the loan so the earnest deposit I put down should have been sufficient to cover.

 

[Zoe]

I used the builder's preferred lender.

I pay all the closing costs except the seller would have paid the taxes with the deed transfer (about $2K) and paying the owner's title policy (around $1,500) which is customary in FL.

Closing costs would have been around $10K not including the VA Funding fee of $10,76 which would be rolled up into the loan so the earnest deposit I put down should have been sufficient to cover.

Have you talked with appraiser at your regional loan center with VA? What did they say? What did appraiser that came to your house say about your concerns? What did your lender say about your concerns?

 

[Zoe]

So you did a Reconsideration of value. What did lender or appraiser say about reconsideration of value? VA appraiser in regional loan center also gets the reconsideration of value information.


I'll give you some advice. That appraisal can be transferred to another lender. Closing costs sound high to me. Close to $15k on $300K house? That sounds high to me.


What do you have? A 20 year warranty on it? LOL


Are you buying the rate down? That seems high to me.

 

[Netig]

I agree. My credit scores are 785 and if I had 20% to put down I would definitely go get a conventional loan hands down.

But here's the thing. I'm searching all over my home Zip Code of 34476 and looking at all sales for 3/2 b/w 1500-1750 sqft. You have to go back to July to find anything selling for near $137 a square foot and it was old without a garage. Everything that's sold or listed since August has been at least $150 to as high as $185. It's not a one-off like there are no houses to find similarly priced.

1700 sqft homes have been going for $160/sqft for the past few months. The crappy thing I'm facing is if this deal falls through and I get my earnest money back, why even bother going to Adams or DR Horton in Brookhaven/Greystone Hills where they are actively selling for $175/sqft for 3/2 1700sqft if the appraisals are still going to lowball? I feel I'm being unfairly shut out of this market. Now I understand why sellers don't want to take VA bids.

And all this "the VA is just looking out for people", give me a break. If by some miracle I can still close on this house, my mortgage payment would be around $1550. But if I have to go potentially look for rentals, the 2br/2ba apartments in the good areas close to work start at $1800. Rental Houses? Meh, if you can find them in Marion County, maybe $1800, but in Alachua County 1300sqft goes for well over $2K. So yeah, I'm being protected into having to throw away higher monthly amounts on rent instead of being able to buy a home that the market says is $280K, but some appraiser who lives in the dark ages thinks none of the area homes appreciated in value since December 2020.

Sounds like your taste exceeds your budget. You haven't gone too far in detail about the appraisal report (which isnt surprising). You just talk about price per square foot in the ZIP code like that means anything - i cant ever remember doing my search based on a zip code, which is typically so expansive and misleading. id bet dollars to donuts that the comps used were from a very close proximity and extrememly similar in most aspects as best coult be expected.

We on the VA panel take the aspect of getting the veteran in the home as priority, so im sure you can imagine how hard it must have been for the appraiser to establish value below contracted price. It must have been an overwhelming amount of data to support that. And now instead of taking time to gather comps from your builder, a trusted realtor or anywhere but ZILLOW (but Zillow says......) you chose to come here and post about it and whine and complain.

When it all goes wrong its all on the appraiser, and most predictably the VA. These posts are a dime a dozen and why AppraiserForum should not allow anyone without a certification or active license.