Help! VA Appraisal came in $40K less

[shrubberyvaluation]

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.

He actually provided details, whether they are accurate or not I cannot say, but he did go into detail saying the comps were two settled in December and one from April. I do not know the contract dates but if they could be considerably older contract dates if they are new construction under contract before being built. If prices were rising like in many part of the country and no market conditions were made it could be way off. Using some more recent sales would of helped lend credibility, if available, and also demonstrate the market being stable. He showed some more recent sales with detail and addresses. Yes price for square foot for the zip code does not really mean anything, but this was just part of the information he gave. What I didn't understand was that I believe he said he sold his house in the mid 200s and he said prices were rising, so did he not have cash to put down from that sale? Did he buy at the last peak?

 

[Netig]

He actually provided details, whether they are accurate or not I cannot say, but he did go into detail saying the comps were two settled in December and one from April. I do not know the contract dates but if they could be considerably older contract dates if they are new construction under contract before being built. If prices were rising like in many part of the country and no market conditions were made it could be way off. Using some more recent sales would of helped lend credibility, if available, and also demonstrate the market being stable. He showed some more recent sales with detail and addresses. Yes price for square foot for the zip code does not really mean anything, but this was just part of the information he gave.

And instead of taking action and doing something productive, hes here posting to us about it. Newsflash: we aren't the lender and we cant help your low appraisal!

 

[Zoe]

champagne appetite with beer budget.

If you know anything about the military, VA told them it is our way or the highway.

 

[Zoe]

Closing costs still shock me on the loan. I don't like that number. It kinda pisses me off.

 

[Hopeful2021Buyer]

Closing costs still shock me on the loan. I don't like that number. It kinda pisses me off.

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.

 

[Zoe]

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.

JGrant or some others in FL might could address. We really can’t address value with you without engagement. No way I could be engaged without acquiring temporary license and flying there with you paying my expenses.

Your focusing on value. We can’t address market value because you are not a client.

 

[Zoe]

Now, I understand VA’s perspective. Evidently they have communicated with appraiser. VA is the client.

 

[Zoe]

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

 

[timindp]

Have your lender do an audit or review on the appraisal if you think it is bad. If it is bad, then you have an argument.

 

[Hopeful2021Buyer]

Have your lender do an audit or review on the appraisal if you think it is bad. If it is bad, then you have an argument.

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?