Help! VA Appraisal came in $40K less

[Alsie35]

Forgive me if I just "drop in and snipe" without reading the entire thread - so apologies if anyone has already made the following point:

In a rising market, new construction homes will usually be priced above what a comparable preexisting home will sell for at the same time. I'll leave the commenting on the market economics of it all to those more qualified to make such comments.

For a variety of reasons unique to the dynamics of the past year (among which were the increase in building costs), that expected difference was temporarily exaggerated outside of normal parameters. The OP was caught in this cycle and one way it may have manifested itself was with the appraisal he got. Absent having done a Field Review of his appraisal none of us can have an informed opinion as to whether it was below market or right on.

My personal view is that buying a preexisting home is usually a better deal for the average homeowner for a whole slew of reasons - price being one of them. Your experience may vary.

 

[KYLECODY]

but ...
buying a new home instead of a preexisting one is, in my opinion, always a bad idea - and was DOUBLY so in the past year. (Just my opinion, of course. Your experience may vary).

Psst..Tract homes around here have one year build times. Nearly all the new construction homes that went under contract a year ago are closing up 15-20% from that time. Nothing like making 50-100k before you close.

 

[Alsie35]

Psst..Tract homes around here have one year build times. Nearly all the new construction homes that went under contract a year ago are closing up 15-20% from that time. Nothing like making 50-100k before you close.

...unless of course you were one of those folks who went to contract on a new construction home in mid-2020 ... only to be told by the builder in early 2021 that your contracted sale price was now going to be unilaterally raised $100K by the builder, and if you didn't like it, well, you would get your deposit back. (This was the scenario in San Antonio this past Spring when prices were going crazy along with material costs. Now how much of that "hold up" was due to profiteering and how much to actual building material cost increases I can't tell you ... but what I CAN tell you is that I would not have wanted to be one of those buyers. And I wasn't. And we're quite happy with our 9-year old home and its mature trees, too ).

BTW Kyle - did I ever tell you how I HATE people who quote my posts while I am still in the process of editing them?

What you quoted was my initial draft which sounded a bit too harsh, which was not my intent. Thank you.

 

[Hopeful2021Buyer]

The deal officially died this morning. The seller already has potential back offers on the new home and sent me a release form. The new listing price for the home will be $290K, that's $10K more than what my contract was for. The seller's realtor apologized and said I didn't do anything wrong and based on the CMA that was done the house should have appraised for over $300K. Everyone blamed the appraiser. She sent me realistic comps that were submitted to the appraiser but for one reason or another, he rejected all of them. Meanwhile, one of the 4 houses built last year which has less upgrades than mine just went under contract for $299,000 (3/2 1760sqft), while one of the other builds appraisal mentioned earlier came in for contract price in the $270's.

At this point, I'm done trying to buy, but I'm not going to let this injustice slide. I am a Veteran. I am entitled to use my VA loan., which implies getting a loan with ZERO money down. However, in this market, veterans can't win bidding wars and now apparently can't even buy new construction without being screwed over by rogue appraisers who can single-handedly derail a deal. The house I signed a contract for was a fair price for the house size, square footage, and lot based on comparable sales, pendings, and actives in the local market zip code (34476). There is no legitimate reason why the house shouldn't have appraised for at least the contract price.

I'm not sure what funding source (if any) will be used for the new buyers at the higher price, but if that appraisal comes in for that contract price, I will use that info with my complaint to the VA and against the original appraiser. Even if it means pursing legal avenues to only get my $500 back for the appraisal it will be well worth it if the system is reformed. I've been living for 4 months in a hotel waiting for my house to get finished so I could get to closing. To be derailed near the very end by complete BS is unacceptable.

https://www.rubio.senate.gov/public...and-military-families-with-homebuying-process

 

[shrubberyvaluation]

Well they are not going to blame themselves. I have no way of knowing if those sales are better than the comps the appraiser chose. I get it all the time where I'm asked to consider all sorts of sales outside of the subject's neighborhood, homes much larger, or homes that are significantly better in condition. Most CMA's I see are pointless things the realtor sticks together based on price. Just being the same zip code does not mean it is necessarily the best. There are ranges within zip codes in my coverage areas at least. I assume the other parties in the transaction that know it is a great deal had people lined up to help finance the rest.

 

[KenAZ]

Cute article, they can write whatever they want. They contradict their "numbers" numerous times in several places, did you read the article? Still looking for your 50% number. Do your own research and see what you come up with.

Correction: It was 44% over the past 2 years, 23% over the past year.

Phoenix Real Estate Market

Best single graph of the Phoenix real estate market. In one graph you see the most important trends driving home prices and home sales in the metro Phoenix, Arizona real estate market.

arizonarealestatenotebook.com

 

[KYLECODY]

Correction: It was 44% over the past 2 years, 23% over the past year.
View attachment 56144

Phoenix Real Estate Market

Best single graph of the Phoenix real estate market. In one graph you see the most important trends driving home prices and home sales in the metro Phoenix, Arizona real estate market.

arizonarealestatenotebook.com

Getting closer, but now you're just quoting a different article. Do your own stats on the MLS...Above is median, what about mean? I hope you don't base time adjustments off random articles that are all over the place?

 

[Cob]

I am always amazed when a buyer wants to spend $40k more than what a home is worth. I would love to see the builder sales of similar size homes. I bet that they are all about $4ok below the sales price.

The appraiser did you a favor. Others are paying $40k over due to emotions and anxiety. Appraiser are valuating the actual home and not including emotional bids way over the actual worth of the home

It's nothing to be amazed about when you think about it, the buyers aren't going to spend $40,000 more of their money in this situation, the buyer isn't going to pony up $40,000 of their money, it's typically someone else's $$$

 

[Cob]

The deal officially died this morning. The seller already has potential back offers on the new home and sent me a release form. The new listing price for the home will be $290K, that's $10K more than what my contract was for. The seller's realtor apologized and said I didn't do anything wrong and based on the CMA that was done the house should have appraised for over $300K. Everyone blamed the appraiser. She sent me realistic comps that were submitted to the appraiser but for one reason or another, he rejected all of them. Meanwhile, one of the 4 houses built last year which has less upgrades than mine just went under contract for $299,000 (3/2 1760sqft), while one of the other builds appraisal mentioned earlier came in for contract price in the $270's.

At this point, I'm done trying to buy, but I'm not going to let this injustice slide. I am a Veteran. I am entitled to use my VA loan., which implies getting a loan with ZERO money down. However, in this market, veterans can't win bidding wars and now apparently can't even buy new construction without being screwed over by rogue appraisers who can single-handedly derail a deal. The house I signed a contract for was a fair price for the house size, square footage, and lot based on comparable sales, pendings, and actives in the local market zip code (34476). There is no legitimate reason why the house shouldn't have appraised for at least the contract price.

I'm not sure what funding source (if any) will be used for the new buyers at the higher price, but if that appraisal comes in for that contract price, I will use that info with my complaint to the VA and against the original appraiser. Even if it means pursing legal avenues to only get my $500 back for the appraisal it will be well worth it if the system is reformed. I've been living for 4 months in a hotel waiting for my house to get finished so I could get to closing. To be derailed near the very end by complete BS is unacceptable.

https://www.rubio.senate.gov/public...and-military-families-with-homebuying-process

What properties sell for and what the appraise for are two WAY different things, MOST people bring the extra $$$ to the closing table, where I live in Austin, a few months back I saw SEVERAL comparable sales that were listed for $450,000 in neighborhoods where the highest sales EVER were $500,000 and these properties sold/closed for $605,000 and $607,000 that were listed for $450,000, guess what, they were CASH offers.

If you are trying to purchase a home in the current real estate climate that the US is currently in and you do NOT have extra cash to make up the difference on an appraisal, then you are for SURE going to end up holding the short end of the stick, you simply CAN NOT compete with people/corporation or entities paying all cash or making up the difference of an appraisal with cash.

The days of people signing contracts on properties and just expecting for it to appraise for the contract price are simply not happening right now, it stinks for you, but again, in the current real estate climate in most of the US, you are at a HUGE disadvantage, if it was me I would also give up on trying to buy a home right now and would wait 12-18 months to try again.

STOP blaming the appraiser, the appraiser DOES NOT KNOW YOU from a hole in the ground, they have NO CLUE who you are and no reason to have the appraisal come in lower than your contract price, the appraiser did NOT do this, the appraisal came in where it came in. Good luck when you do jump back in and try to purchase a home again.

 

[Hopeful2021Buyer]

What properties sell for and what the appraise for are two WAY different things, MOST people bring the extra $$$ to the closing table, where I live in Austin, a few months back I saw SEVERAL comparable sales that were listed for $450,000 in neighborhoods where the highest sales EVER were $500,000 and these properties sold/closed for $605,000 and $607,000 that were listed for $450,000, guess what, they were CASH offers.

If you are trying to purchase a home in the current real estate climate that the US is currently in and you do NOT have extra cash to make up the difference on an appraisal, then you are for SURE going to end up holding the short end of the stick, you simply CAN NOT compete with people/corporation or entities paying all cash or making up the difference of an appraisal with cash.

The days of people signing contracts on properties and just expecting for it to appraise for the contract price are simply not happening right now, it stinks for you, but again, in the current real estate climate in most of the US, you are at a HUGE disadvantage, if it was me I would also give up on trying to buy a home right now and would wait 12-18 months to try again.

STOP blaming the appraiser, the appraiser DOES NOT KNOW YOU from a hole in the ground, they have NO CLUE who you are and no reason to have the appraisal come in lower than your contract price, the appraiser did NOT do this, the appraisal came in where it came in. Good luck when you do jump back in and try to purchase a home again.

Scenario: Conventional Loan gets an appraisal for a house at purchase price for $310K, but wanted some seller concessions that the sellers declined, and the buyers walked. The house goes back on the market and within a week or so the sellers get a new contract with a VA loan buyer. So because VA requires its own appraisal they send their appraiser out (who just happens to be the same person that appraised the house I was trying to buy). This VA appraiser comes back with an appraisal of $290K, nearly $20K less than the appraisal done the week before, using comps. nearly a year old. During Tidewater the comps used in the conventional appraisal are submitted, but the VA appraiser refuses to consider them for one reason or another. Deal crashes.

When I talk to several realtors in the area asking about whether they've seen issues with VA/FHA appraisals without mentioning any names, it's telling when nearly all of the them call out this appraiser by name without me giving out their name. The guy has a reputation in the neighborhood as being a low baller, refusing to consider any information submitted in the tidewater process and being extremely difficult to work with. They've been in the business for 42 years and think they know better than everyone else. So yes, I will blame the appraiser for being a grossly incompetent a-hole.

Appraisal information is available on the Marion County website. So when some conventional buyers get an appraisal at/or above the increased purchase price of $290K for the house I was trying to buy that the VA appraiser only gave $237K, I'm just supposed to let that go even though this one person is costing me thousands of dollars in additional expenses? Not a chance.