Help! VA Appraisal came in $40K less

[shrubberyvaluation]

Numerous Problems the lender identified with the appraisal:
(1) Concern the appraiser appraised the wrong house - This is when the appraiser originally called Tidewater but the amounts weren't known yet. The reason is that the following day after the appraisal was supposedly completed the appraiser had to come back to the site to pick up their measuring tool which they forgot and it was found on another lot of a house that was nowhere near completion and had less upgrades than mine and figured he may have appraised the wrong house. Lender contacted the VA about it and they said to do a phone call and compare the pictures in the report. The pictures matched the house he was supposed to appraise. But when he went inside the house the day he picked up his measuring tool, the builder happened to be doing work on the house and the appraiser acted like he had not been in the house before (the appraiser is apparently in his late 70's). The appraiser then asked the lender for the builder to contact him the next day which he did and once the builder got off the phone he contacted the lender and stated that the appraiser was "very confused".

(2) Errors on the appraisal report - he checked water/septic saying hookups were not available. This is true for the areas outside the development, but the new development hooks-up into the Marion County Utilities for public water/sewer via the Oak Run retirement community plant.

(3) Appraiser also marked market appeal for the defined area as "average" and prices as "stable". Not even close. There has been a significant increase of sales in the past six months supporting the purchase price, and especially within the last 3 months, but the appraiser used two new construction homes that closed in December 2020 and one that closed in April 2021 that were all under contract months before under 2020 pricing before the market took off.

(4) One of the comps the builder's realtor submitted in a community called Marco Polo just sold for $326,000 and was the most similar in size, lot, and square footage, and upgrades. The VA appraiser omitted it with the reason "out of price range". Nobody knows what that means. It was not a one-off sale as there were other sales in similar size and square footage, but on larger lots (about .5-.75 acre) where the appraiser omitted completely for lot size.

All of this was submitted by the lender along with my letter requesting a ROV to the VA RLC in St Pete at the end of September. They told the lender they would issue a NOV by 10/7. When that day came the value had been upped to $260K or 10%. This appears to be the maximum the VA is able to adjust without doing extensive field work.

At this point the lender told me they had done what they could and that requests from me would have more weight with the VA going forward. So I sent another request (10/7) and actually CC'd the VA appraiser who promptly replied "Sorry, I cannot help you". The other recent appraisal info for the nearby houses wasn't known yet otherwise I would have felt comfortable moving to another financing source. But the VA never responded. When I got the updated appraisal info for the nearby houses, I forwarded that on 10/18, but received a reply that my request had been denied 10/14. I asked why. They never responded. That's when I filed the request with Rubio's office and received my case number this past Friday.

Everyone but the VA appraiser (builder, realtor, lender, even the VA RLC) acknowledged that the $237K was an inaccurate estimate of value. The issue is if the VA is limited to upping the value 10% and the appraisal was way off to begin with, the 10% was inadequate. They apparently would have to do field work and additional extensive review which I guess they didn't want to do not because there wasn't merit but because their just being lazy and thinking no one will question what they issue. But I did and that's why I submitted the request to Rubio's office. According to the comps that were used on the FHA loan, the NOV on the house I was trying to buy should have come in somewhere around $300-$310K.

If my Congressional inquiry is successful the NOV will get adjusted again and then hopefully I will be able to return to the builder to do a new contract. It'll probably be too late by the time all of this is completed, but if I can help one veteran not have to go through what I have, it'll be worth it. It's one thing to lose bidding wars, it's another to do due diligence and go buy new construction where we find a local builder who is actually charging less than the high volume builders in the area while providing a greater quality product, and yet that house fail to appraise due to an incompetent appraiser.

Oh, and while we are on local builders, that reminds me about something. My guess is they probably had to get funding via Construction loans to build the homes they do. Aren't those loan amounts released as the home is completed and aren't the homes evaluated throughout the process for appraisal purposes to ensure the bank gets their money back at the home's completion/closing? I mean if a brand new home was going to actually appraise for $40K less than the actual purchase price, then why would the bank keep lending money for the construction loan?

1) If it was not complete didn't the lender give the appraiser the specs? As long as the GLA and layout is correct this should not be an issue.

2) I wouldn't care too much unless he was adjusting for this or all of the comps had different water/sewer and was not explained.

3) A lot of places in the country prices have been on a significant rise; however, there are some pockets near me that have been stable and I don't know your area. Using comps that were contracted over a year to a year and a half ago doesn't seem like the best to show current market conditions, unless there is a lack of better comparable sales that are more recent.

4) What and who is defining a "price range." Sounds like nonsense to me.

People here are skeptical because we have seen many people lie or exaggerate. There are appraisers that do not provide credible reports but people here will not throw people under the bus based one person's word they do not know. I'm just commenting based on your words and my lack of knowledge of the area. I feel that if he could of provided a couple more recent comps, even if they needed a little more adjusting it would of gone a long way to lend more support, but that is just me and I don't know if anything else comparable was available.

 

[Tiffany Gibbons]

Zoe,

I appreciate your assistance and realize you are trying to help. I've tried to include as much information as I've received it. At this point I have a Case number received for a Congressional Request with getting the VA RLC to respond. They got everything - every document, every communication, everything. If you want me to send that, pm me your email and I will gladly forward it to you as the total correspondence/documents is over 17MB. The main issue is that when my request went up is was impossible to get any followup from the RLC contacts. The phone number (option 6) is a joke as it disconnects after the 4th week. After giving them a week to review my follow-up email from 10/7, I got an email from one of the Senior Appraisal Reviewers with a message on 10/21 that said "Morning, your request was denied 10/14" without providing any additional details. I asked why and they never responded so I requested help in getting a response. Looking at some of the VA regs. they are limited at adjusting the appraisal by more than 10% which requires more extensive work, so they raised it the max but weren't willing to do the extra work.

As for closing costs, yes they included points on the Good Faith Estimate, but I had already informed the lender that I would be fine with the lowest rate to avoid points. That would cut about $2900. The other major chunk is $3500 prepaid tax due to a timing issue. Florida invoices annually for property taxes in late October that are due beginning in November. As we don't know when closing would have occurred it wasn't known if this year's tax bill ($255 based on the TRIM) would be paid in time to update the records or if we'd have to prorate, and if it's prorated it has to be on the improved value which means I'd be prepaying a full years worth of taxes now only to get it back in Feb/March when the escrow analysis is done since there would be a huge projected overage assuming they also collect the 3 months prepaid and my first mortgage payment due in January. Once these things are done, that would have brought the closing costs just a little under $10K. I've reviewed the good faith estimate and everything else looks standard. Most of the costs like the appraisal fee and mortgage transfer taxes are fixed. I don't see any origination charges or anything like that. Maybe FL rates/services for standard items are higher?

Champaign taste, lol.
The house address is 6674 SW 109 Lane, 34476. There's an updated photo of it on Zillow.

6674 SW 109th St, Ocala, FL 34476 | Zillow

6674 SW 109th St, Ocala FL, is a Single Family home that contains 1720 sq ft.It contains 3 bedrooms and 5 bathrooms. The Rent Zestimate for this Single Family is $2,070/mo, which has decreased by $23/mo in the last 30 days.

www.zillow.com

The house at 6752 SW 109 Lane was used by the VA appraiser as a comp. That home went under contract in mid-2020 and closed December 2020 for $237,900. A new model of this same house is being built on Lot 2 (6952 SW 109 Lane). This is the FHA-backed house that just appraised for $290,000 using the same realtor comps that were submitted to the VA appraiser, but the house is considered less upgraded and quality than mine (note: I did not select any options for the house I was trying to buy they were all predetermined).

Also note that the house at 6712 SW 109 Lane appraised for $300K. Talk about relief after their realtor heard what happened with the appraisal on my house! They already had to come down twice on the price. When my house was delayed I seriously considered taking a look at this one because it's got a built in window seat that would be perfect for my dog.

So yeah, the VA apprasier was spot on in this market saying the new house at 6674 that will be finished in November is only worth $237K /sarc.

I was looking at some homes in Dunnellon to see if I could find what I was looking for. My guess it that the same VA appraiser would list these at around $250K or less, right?

9835 SW 207th Cir, Dunnellon, FL 34431 | Zillow

9835 SW 207th Cir, Dunnellon FL. The Zestimate for this property is $385,500, which has decreased by $687 in the last 30 days.The Rent Zestimate for this property is $2,500/mo, which has increased by $100/mo in the last 30 days.

www.zillow.com

20965 SW 93rd Lane Rd, Dunnellon, FL 34431 | Zillow

20965 SW 93rd Lane Rd, Dunnellon FL.This home last sold for $299,900 in January 2022. The Zestimate for this property is $345,100, which has decreased by $1,545 in the last 30 days.The Rent Zestimate for this property is $1,949/mo, which has decreased by $50/mo in the last 30 days.

www.zillow.com

This is the norm in Marion County and pretty much all of Florida. In the past you could go into the rural counties (Levy, Gilchrist, Putnam) and find some lower priced deals. Not the case anymore Everything is going over $170sqft or more.

Do you notice that the Zillow listing for the house you had a contract on (still says active now) above says 3 BR, 5 BATHS? Is that accurate? This is why "Zillow" is a joke. I believe that you did not select any options, looks pretty standard to me.. No frills. Also no lot size is listed, when you said it was .20 of an acre, which brings me to my next point:

The two for sale listings you have in Dunnellon above in addition to being larger homes with more amenities, are on 1.12 acre lot and 1.01 acre lots, respectively. These are not comparable to the zero lot line home you were trying to purchase. No appraiser in their right mind would use sales over an acre when appraising a zero lot line home. I personally would not use the .50 to .75 acre lots if there are other similarly sized zero lot line sales available either in the development or similar developments, which there are tons of according to the "Zillow" website.

Please stop with the "price per square foot", it truly is meaningless, especially when you are including existing homes all over an area, with inground pools (especially in Florida where they can be used year round) we can already tell you think it should be the same no matter what the square footage of the house from 1500-2000, 2-4 car garage and if you have a tiny lot or 1.5 acres.

Whoever said that was like buying a car by the pound, that is on point. I would not use that term when speaking with a Review Appraiser at the RLC either. Many of them are licensed appraisers and many of them are also Veterans, like you.

It does not sound like you are getting a great deal with the Builder's "Preferred" Lender with regard to points and closing, like Zoe said, maybe look into another lender, sounds like you are using the Mortgage Company that the Builder/Developer actually owns. As for the prepaid taxes, most assessors (in TN anyway) don't ever pick up the house on the tax card until after a private owner takes possession of the completed house, the builder never pays anything in taxes except land value, maybe a partial value if it takes a really long time to build the house due to weather, etc. When I worked at the Assessor's Office, we called it "Welfare for Builders". It actually could have been the appraiser for the assessor out there before, not the VA appraiser, since you can see they are out there verifying sales on the county website.

 

[Hopeful2021Buyer]

Do you notice that the Zillow listing for the house you had a contract on (still says active now) above says 3 BR, 5 BATHS? Is that accurate? This is why "Zillow" is a joke. I believe that you did not select any options, looks pretty standard to me.. No frills. Also no lot size is listed, when you said it was .20 of an acre, which brings me to my next point:

The two for sale listings you have in Dunnellon above in addition to being larger homes with more amenities, are on 1.12 acre lot and 1.01 acre lots, respectively. These are not comparable to the zero lot line home you were trying to purchase. No appraiser in their right mind would use sales over an acre when appraising a zero lot line home. I personally would not use the .50 to .75 acre lots if there are other similarly sized zero lot line sales available either in the development or similar developments, which there are tons of according to the "Zillow" website.

Please stop with the "price per square foot", it truly is meaningless, especially when you are including existing homes all over an area, with inground pools (especially in Florida where they can be used year round) we can already tell you think it should be the same no matter what the square footage of the house from 1500-2000, 2-4 car garage and if you have a tiny lot or 1.5 acres.

Whoever said that was like buying a car by the pound, that is on point. I would not use that term when speaking with a Review Appraiser at the RLC either. Many of them are licensed appraisers and many of them are also Veterans, like you.

It does not sound like you are getting a great deal with the Builder's "Preferred" Lender with regard to points and closing, like Zoe said, maybe look into another lender, sounds like you are using the Mortgage Company that the Builder/Developer actually owns. As for the prepaid taxes, most assessors (in TN anyway) don't ever pick up the house on the tax card until after a private owner takes possession of the completed house, the builder never pays anything in taxes except land value, maybe a partial value if it takes a really long time to build the house due to weather, etc. When I worked at the Assessor's Office, we called it "Welfare for Builders". It actually could have been the appraiser for the assessor out there before, not the VA appraiser, since you can see they are out there verifying sales on the county website.

No frills? Pretty standard. Uh-uh.
The outside isn't finished yet. The lot will be fully irrigated/sodded and landscaped similar to the other properties in the video below. The inside of my house will have upgraded fixtures that exceed what's in the Brianna, specifically the electric fireplace. The inside of these homes aren't standard homes you find around here. No frills. Sheesh. Look at the link below.

America's Finest Homes

This is "America's Finest Homes" by Cherena Films on MediaZilla

mediazilla.com

I never said to compare the Dunnellon homes to the one I'm trying to buy. I just was listing the kind of house I want to buy but am spoofed whether it would appraise or not.

this one is most comparable https://www.zillow.com/homedetails/4955-SW-116th-Pl-Ocala-FL-34476/2072070700_zpid/ Main difference is it's on .35 acre but was initially omitted because "Out of Price Range" or whatever that means on the appraisal form.

 

[shrubberyvaluation]

Do you notice that the Zillow listing for the house you had a contract on (still says active now) above says 3 BR, 5 BATHS? Is that accurate? This is why "Zillow" is a joke. I believe that you did not select any options, looks pretty standard to me.. No frills. Also no lot size is listed, when you said it was .20 of an acre, which brings me to my next point:

The two for sale listings you have in Dunnellon above in addition to being larger homes with more amenities, are on 1.12 acre lot and 1.01 acre lots, respectively. These are not comparable to the zero lot line home you were trying to purchase. No appraiser in their right mind would use sales over an acre when appraising a zero lot line home. I personally would not use the .50 to .75 acre lots if there are other similarly sized zero lot line sales available either in the development or similar developments, which there are tons of according to the "Zillow" website.

Please stop with the "price per square foot", it truly is meaningless, especially when you are including existing homes all over an area, with inground pools (especially in Florida where they can be used year round) we can already tell you think it should be the same no matter what the square footage of the house from 1500-2000, 2-4 car garage and if you have a tiny lot or 1.5 acres.

Whoever said that was like buying a car by the pound, that is on point. I would not use that term when speaking with a Review Appraiser at the RLC either. Many of them are licensed appraisers and many of them are also Veterans, like you.

It does not sound like you are getting a great deal with the Builder's "Preferred" Lender with regard to points and closing, like Zoe said, maybe look into another lender, sounds like you are using the Mortgage Company that the Builder/Developer actually owns. As for the prepaid taxes, most assessors (in TN anyway) don't ever pick up the house on the tax card until after a private owner takes possession of the completed house, the builder never pays anything in taxes except land value, maybe a partial value if it takes a really long time to build the house due to weather, etc. When I worked at the Assessor's Office, we called it "Welfare for Builders". It actually could have been the appraiser for the assessor out there before, not the VA appraiser, since you can see they are out there verifying sales on the county website.

I agree with this. I would also add that the agents, lender, builder etc agreeing with you that the appraiser is an idiot is meaningless. They all have a vested interest in the sale going through and we hear the same thing all the time. Like I said in an earlier post I wouldn't compare that to homes on over an acre. My biggest thing is the report not using more recent sales to further illustrate current market conditions if available. If there were nothing recent that is comparable with a similar lot size I would consider a home on a .5 or .75 acre lot if a typical buyer of the subject would consider it as an alternative. Was a 1004MC filled out? Did s/he put 0's for comparable sales 4-6 months and current-3 months? And yes price per square foot is meaningless as it includes the lot and other amenities on the property, so having a smaller lot is going to show a lower price per square foot ceteris paribus.

 

[Zoe]

No frills? Pretty standard. Uh-uh.
The outside isn't finished yet. The lot will be fully irrigated/sodded and landscaped similar to the other properties in the video below. The inside of my house will have upgraded fixtures that exceed what's in the Brianna, specifically the electric fireplace. The inside of these homes aren't standard homes you find around here. No frills. Sheesh. Look at the link below.

America's Finest Homes

This is "America's Finest Homes" by Cherena Films on MediaZilla

mediazilla.com

I never said to compare the Dunnellon homes to the one I'm trying to buy. I just was listing the kind of house I want to buy but am spoofed whether it would appraise or not.

this one is most comparable https://www.zillow.com/homedetails/4955-SW-116th-Pl-Ocala-FL-34476/2072070700_zpid/ Main difference is it's on .35 acre but was initially omitted because "Out of Price Range" or whatever that means on the appraisal form.

You are funny. You seem naive. That is no insult intended. Have you thought about different lender? How much money do you have down with this lender?

 

[Zoe]

Your closing costs still seem bad to me.

 

[Zoe]

How much money have you paid this lender already?

 

[Hopeful2021Buyer]

VA and lender are the client. Still don’t like closing costs.

Ok, so I got more of the full story today. But I have a question first.

I was under the impression that if a request for valuation adjustment of more than 10% required a field review and the original appraiser was bypassed. If the request was less than 10% then it gets forwarded to the original appraiser for review. Is this correct or am I mistaking something or percentages.

Here's the thing. I thought it was the VA that had revised the value upwards from $237K to $260K, but apparently they sent it back to the original appraiser as if the request was only 10% or less. When I requested a Reconsideration of Value, they rejected it based on the fact they submitted it to the original appraiser and that the VA defers to local authority and accepted the revised amount by the appraiser.

Here is the exact wording of what I received:

VALUE APPEAL
I have reviewed the appraisal in question and the VA Fee Appraiser used five sales located in the Subject's immediate market area. All adjustments are reasonable and are within VA guidelines. I have also reviewed the value appeal which included additional sales. The additional sales were not superior to the comparables used in the report. AVM does not support the increase in reasonable value.

On the first request, the appraiser reviewed the comps provided and felt they warranted to be a part of the report. The report was increased by the appraiser to $260k based on the evidence provided in the 1st request. The ROV was not needed at that point. The VA reverts to local authority. The appriaser had revised the report and that was the new reasonable value. The decision for the 2nd level request denied, reasonable value stands.

VALUE APPEAL DENIED
Reasonable Value $260,000.00 stands.

Ok, fine, so I asked them how the hell 3 homes on the same street (just found out the Madison being built next to mine also came in above contract price $274K) of similar size, square footage, and lot and appraised for full/over the contract purchase price while my home was superior to the other models. It's not like the builder's realtor submitted different comps. What was deemed "inferior" comps was acceptable under alternate financing means (FHA, Conventional).

I

 

[Zoe]

No frills? Pretty standard. Uh-uh.
The outside isn't finished yet. The lot will be fully irrigated/sodded and landscaped similar to the other properties in the video below. The inside of my house will have upgraded fixtures that exceed what's in the Brianna, specifically the electric fireplace. The inside of these homes aren't standard homes you find around here. No frills. Sheesh. Look at the link below.

America's Finest Homes

This is "America's Finest Homes" by Cherena Films on MediaZilla

mediazilla.com

I never said to compare the Dunnellon homes to the one I'm trying to buy. I just was listing the kind of house I want to buy but am spoofed whether it would appraise or not.

this one is most comparable https://www.zillow.com/homedetails/4955-SW-116th-Pl-Ocala-FL-34476/2072070700_zpid/ Main difference is it's on .35 acre but was initially omitted because "Out of Price Range" or whatever that means on the appraisal form.

Now you got me thinking. As an appraiser, they can not hang their hat one sale. I deal with new builders . Still don’t like closing costs you are paying.

 

[Hopeful2021Buyer]

Your closing costs still seem bad to me.

Had to pull a copy of the document. My apologies on the origination charges. I thought that would show up on one line and didn't see that name, but missed the actual section.

This was for a $279,900 loan with the $10,076 funding fee rolled into the loan.

Admin Fee: $240
Processing Fee: $625
Underwriting Fee: $625

Can't shop for:
Appraisal Fee $500 (already paid)
Credit Report: $100
VA Funding Fee (Rolled into loan)
Water/Well Inspection $450

Shopping Services:
Title Endorsement 8: $25
Title Endorsement 9: $153
Lender's Title: $1,525 (rates are set in FL $5.75 first $100K, $5.00 each addl $1K up to $1M)
Survey Fee: $400
Title Exam Fee: $250
Title Search: $255

Mortgage Transfer Tax: $1,014 ($3.50 per $1K)
Recording Fees: $267

Prepaid: Homeownsers Insurrance Premium: $750
Prepaid Interest: $685 (this was based worst case on the 1st of the month, obviously less if near the end of the month)
County Property Tax: $3500 - If 2021 taxes paid reflected prior to closing, this would be $0, but if not I'd get most back next March on the analysis

Escrow:
Homeowners: $62.50 *3 = $187.50
Taxes: $291.67 *3 = $875.01 (you think this is bad, try living in Alachua County where UF owns have the land and people pay $5K up on $200K properties)

Total Closing Costs: $12,426.51
If this year's property tax bill is paid, wouldn't collect the ($3,500)
Already paid ($500) appraisal fee

Balance: $8,426.51
Earnest Deposit: $10K

I'd get back: ~$1,600