Help! VA Appraisal came in $40K less

[Tiffany Gibbons]

What you said makes sense. I don't dispute it. And if there are no comparable sales to back up the refinance, then there's no standing for the veteran.

But that's not what happened in my case.

I was buying a home for $280K. A 3/2 1720sqft quality new construction home on a fully sodded/irrigated lot about 0.20 acre in an area known as the Ocala Triangle (Zip 34476) in SW Marion County (SR 200 & I-75 are the long sides and the Nature Preserve that divides the neighborhood from Marion Oaks as the base). My house was the 5th house in a new development off of SW 103rd St just north of the Oak Run retirement community. As such, unlike the area homes on well/septic, the new development was on public water/sewer.

The first four homes the builder built last year were built/sold in mid-late 2020
3/2 1684sqft - $237,000
3/2 1760sqft - $244,000
3/2 1720sqft - $260,000
3/2 1880sqft - $290,000

All the homes have the same number of rooms, similar square footage, and lot size with the main difference being some of the homes had better upgrades. All homes appraised at least purchase price according to Marion County's website except for the $260,000 house which didn't have an appraisal so I am assuming it was a cash buyer. The last of the four homes to close was in December 2020 for the $237K which is the 1 of the 4 properties that the appraiser used even though my house had as many upgrades as the $290,000 house that also sold in December 2020.

The next series of homes the builder built started around March and the builder priced as such:
Another 3/2 1684sqft home - $270,000
Another 3/2 1760sqft home - $265,000
Another 3/2 1720sqft home - $275,000
A new 3/2 1725sqft home (the one I was trying to buy - $280,000

This is in line what was going on with pricing trends in Marion County during the early part of 2021 which has only accelerated. When I was looking at selling my own home that I bought for $219K back in 2018 just after Christmas, the realtor told me I would be lucky to make $15K after all the closing fees and the house would probably sell in the mid $250's. However, when the market really heated up I put my home on the market in late April and my house appraised and sold for $298,000. Reason I wanted to sell was to downsize and get a manageable yard size that would be easy to fence in and maintain for the dog.

I liked the area I lived in and visited a couple developments in the area that were being built out by some of the national builders. Similar sized homes with less upgrades were under contract for around $260K but all current builds were pending and they told me to get under contract in the timeframe I wanted the prices would be up $30-$40K within a few months. Around June things really got out of control with actual closing sales (not pendings) were flying into the $290's and above. I checked this week and it's even worse. Everything in my zip code that's similar to my house not including all the quality upgrades has sold or is selling for $310K and above. The builder I signed my contract with did not mess with the contract price and honored it despite the costs of all the materials still going up. So from my vantage point and everything going on, I was clearly getting a bargain.

I saw the comps the Realtor submitted in the Tidewater. A couple were from the developments previously mentioned and homes less than 2 miles away. The appraiser shot them down either for lot size or one that he said "was out of price range" even though it was closest to my house in size/quality but was a home from another local builder that had just closed for $325K. Another one was the basic Freeport model which I think is DR Horton's lowest/cheapest model in the area. That one sold for $265,000 but is only 1520 square feet which the appraiser said was too small to compare? None of the homes had the upgraded flooring, cabinetry, or countertops mine had and other than the homes in the other development, the other homes the appraiser used were on well/septic.

The 3 homes the appraiser used was the $237,000 home from December 2020, and another $237,000 sold that also sold in December, and a $239,000 home that sold in March. He used nothing from the past 6 months. There were not less than 10 comps submitted in Tidewater. I went through the builder's preferred lender and they were familiar with the appeal process for the VA so I did what I needed to do.

After searching online for the recent sales for 3/2 < 2000sqft in my zip code, everything has sold for at least more than than $170/sqft. When the builder decided to release me from the contract, they raised the price of the house to $290K. And I have no doubt they will get another buyer for that price because that's still a little less than what DR Horton & Adams Homes are charging.
r

Hello, the "appraisal" values you are seeing on the property appraiser's website are the Marion County Property Appraiser's value (usually around the purchase price) for mass appraisal tax purposes. These sales are verified and used for a benchmark for the reappraisal cycle as it appears to to be "cookie cutter" type subdivision. You are not seeing private appraisal values used for mortgage purposes on the county website, I promise you.

 

[Tru Red]

BUYER: put your own money in to make up the difference.

It's not the lenders responsibility to make a loan more than the appraisers opinion of value. And most taxpayers do not want the VA to guarantee a loan beyond the appraised opinion of value.

The appraiser could say: the specific nuances of the motivation of the parties are not known to me. I do not know any of the parties to the transaction and do not represent them. Whatever the ultimate reasons are behind the offered price, it is different from market value as defined.

 

[Zoe]

My point is not many people here can give you good advice because they are addressing value which is no no because we are not your client. You are not our client. Make that sink deep in brain.

I like you very much and appreciate your service. Make my points stick in brain.

 

[Zoe]

You are veteran. I will explain it this way. It is their way or the highway. It is great benefit to veterans. I am totally appreciative.

 

[Zoe]

Probably one of best benefits to veterans. Think I already said that. Don't lose it.

 

[Hopeful2021Buyer]

This thread is still going on?

BUYER: put your own money in to make up the difference.

It's not the lenders responsibility to make a loan more than the appraisers opinion of value. And most taxpayers do not want the VA to guarantee a loan beyond the appraised opinion of value.

The appraiser could say: the specific nuances of the motivation of the parties are not known to me. I do not know any of the parties to the transaction and do not represent them. Whatever the ultimate reasons are behind the offered price, it is different from market value as defined.

Yes it's still going on. The VA RLC in St Pete didn't exactly clarify the process going on here. Back on 10/7 which was the original deadline the VA said they would give the lender the adjusted NOV, the lender contacted me to let me know the value had been adjusted upwards from $237K to $260K. Somewhere online I found conflicting information that 10% was the maximum the VA could adjust without doing additional field work. But the way I read it, the NOV was the NOV and that was it,. Seems it was also said in this thread.

That same day I sent an email to VA RLC requesting a detailed explanation on why the value came in for what it did. The builder had enough and after giving me the weekend to decide whether or not I was going to bring the gap money to closing or try a new funding source to get a new appraisal they released me from the contract so they could put the home back on the market and raise the price $10K. Don't blame them for that because had I been in his shoes I would have done the same.

I emailed the VA RLC to let them know the deal had died, but that I still needed an explanation on how the value was finally determined given all the backup documentation and comps that were submitted.. They sent me a cryptic email saying "based on your earlier email concerns, can you confirm you are canceling your request for a reconsideration of value". I got confused by this because I thought the $260K WAS the reconsideration of value but in the email they indicated that they had forwarded it to another appraisal office in the St Pete Office.

I asked for clarification because everybody was under the impression the $260K was it. The person they forwarded this to last Monday hasn't gotten back to me. So I completed a privacy request through Senator Rubio's office to help me get the information I needed. I only did this because Rubio signed a letter with Senator Hassan back in July asking for greater flexibility and that while it's probably too late to do anything about my situation they were free to use it as an example that the VA loan process is broken.

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

 

[Tru Red]

BUYER: put your own money in to make up the difference.

It's not the lenders responsibility to make a loan more than the appraisers opinion of value. And most taxpayers do not want the VA to guarantee a loan beyond the appraised opinion of value.

 

[Tim Hicks (Texas)]

Yes it's still going on. The VA RLC in St Pete didn't exactly clarify the process going on here. Back on 10/7 which was the original deadline the VA said they would give the lender the adjusted NOV, the lender contacted me to let me know the value had been adjusted upwards from $237K to $260K. Somewhere online I found conflicting information that 10% was the maximum the VA could adjust without doing additional field work. But the way I read it, the NOV was the NOV and that was it,. Seems it was also said in this thread.

That same day I sent an email to VA RLC requesting a detailed explanation on why the value came in for what it did. The builder had enough and after giving me the weekend to decide whether or not I was going to bring the gap money to closing or try a new funding source to get a new appraisal they released me from the contract so they could put the home back on the market and raise the price $10K. Don't blame them for that because had I been in his shoes I would have done the same.

I emailed the VA RLC to let them know the deal had died, but that I still needed an explanation on how the value was finally determined given all the backup documentation and comps that were submitted.. They sent me a cryptic email saying "based on your earlier email concerns, can you confirm you are canceling your request for a reconsideration of value". I got confused by this because I thought the $260K WAS the reconsideration of value but in the email they indicated that they had forwarded it to another appraisal office in the St Pete Office.

I asked for clarification because everybody was under the impression the $260K was it. The person they forwarded this to last Monday hasn't gotten back to me. So I completed a privacy request through Senator Rubio's office to help me get the information I needed. I only did this because Rubio signed a letter with Senator Hassan back in July asking for greater flexibility and that while it's probably too late to do anything about my situation they were free to use it as an example that the VA loan process is broken.

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

Nothing is perfect, but stating the VA loan process is broken based on one instance is not reality. The Tidewater Initiative was adopted by the VA because they want the most reasonable values available. Nothing is 100% reliable, but the Tidewater system is pretty darn good. However, just like the entire mortgage system, not every appraiser/mortgage company/loan officer/title company do the best job every time. An internet search will show numerous complaints for all of them. There simply is no perfect system. With that being said, that does not mean the VA appraiser did not make a mistake in his valuation, but the Tidewater system is there in case of that. None of us can really state which is correct. Since we did not do the appraisal and are not from that market, we have no idea if any of the additional data is relevant. From my experience when I invoke Tidewater, I get the same sales I already had the report and sometimes sales that have nothing to do with the actual immediate market. They will send sales 500+ or 500- sf smaller based on price per foot (the worst indicator of value unless all sales are the same size/age and lot size) and homes from superior neighborhoods with superior improvements/upgrades/quality. It is also my experience, that your builder should have had sales to present that support your contract price. Those or competing builders in the subdivision are the most relevant sales. Why did the builder not have recent closed sales to support their price?

 

[shrubberyvaluation]

Nothing is perfect, but stating the VA loan process is broken based on one instance is not reality. The Tidewater Initiative was adopted by the VA because they want the most reasonable values available. Nothing is 100% reliable, but the Tidewater system is pretty darn good. However, just like the entire mortgage system, not every appraiser/mortgage company/loan officer/title company do the best job every time. An internet search will show numerous complaints for all of them. There simply is no perfect system. With that being said, that does not mean the VA appraiser did not make a mistake in his valuation, but the Tidewater system is there in case of that. None of us can really state which is correct. Since we did not do the appraisal and are not from that market, we have no idea if any of the additional data is relevant. From my experience when I invoke Tidewater, I get the same sales I already had the report and sometimes sales that have nothing to do with the actual immediate market. They will send sales 500+ or 500- sf smaller based on price per foot (the worst indicator of value unless all sales are the same size/age and lot size) and homes from superior neighborhoods with superior improvements/upgrades/quality. It is also my experience, that your builder should have had sales to present that support your contract price. Those or competing builders in the subdivision are the most relevant sales. Why did the builder not have recent closed sales to support their price?

How do you know there were not builder sales that supported it with market condition adjustments if warranted? Although they may be the most relevant in terms of condition, new construction can be contracted out much further back from settlement than a resale. Regardless I think the report would be better supported if it had some more recent sales and making necessary adjustments unless it is some niche area where buyers would not consider anythign else that sold recently.

 

[Tim Hicks (Texas)]

How do you know there were not builder sales that supported it with market condition adjustments if warranted? Although they may be the most relevant in terms of condition, new construction can be contracted out much further back from settlement than a resale. Regardless I think the report would be better supported if it had some more recent sales and making necessary adjustments unless it is some niche area where buyers would not consider anythign else that sold recently.

D R Horton is big in TX. They don't have gaps in sales for months here. I don't know about there. Unless it is a brand new subdivision, they have recent sales every month until they run out of subdivision. These builders don't sell five proposed houses and sit on those five until they are done to sell more. They keep selling them until there is no supply left to keep their crews on a steady pace. So, are there lower sales they are not providing because they don't support your price or is there really no recently closed sales? I don't believe they have no recent sales that would not require market time adjustments. I do believe it is possible that they have recent sales that do not support the price, but I don't know about that specific market.