How accurate is my appraisal?

[angeldaria]

Had two different appraisals completed due to changing building lots during financing. The current appraisal came in 20,000 lower than the first . The home is new construction. The house plans and specs did not change, the market did not change, both building lots are located in the same city/school district. Both building lots appraised for the same value according to audutors office. Both appraisers used the exact same comparables in appraisal report but adjusted comparalbes using very different value assignments. The appraisal reports were completed within 1 month of each other. The first appraisal was completed by a local appraiser. The second appraisal completed by out of town appraiser located over 100 miles away. There is no evidence in the out of town appraisal report that the appraiser consulted with anyone locally familiar with our market. First appraiser has been doing appraisals since 1992 while the second appraiser since 2007. The second appraiser will look at appraisal again but wants the warranty deed to do so. I am concerned about the accuracy of the current appraisal due to the appraisers lack of knowledge of our real estate market and why would he/she need/request the warranty deed for the building lot to give a more accurate appraisal? Any insight into this would be appreciated.

 

[Thomas Fiehler]

What part of Ohio are you located in? I would NOT accept an appraisal by someone located 100 miles from the property. WHo ordered the appraisals? Was it the lender that you are working with? If so, I would contact them and express my concerns. I would also consider filing a complaing with the state because the appraiser should have geographic competency and I would question if they do or not. Please feel free to pm me if you have any questions. If you want to keep this off-line, my # is 513-518-6469.

 

[josephdifranco]

I agree about the credentials. However, they used the same comps, so the out of town guy and in-town guy were on the same general wavelength.

You noted a $20,000 difference, but it would be good to know what each of the total value indications were. If the property is worth 400k, 20k is not a huge difference.

Why do they need a second appraisal within one month?

In the end, maybe make the case of the credentials to the lender and see what happens.

 

[angeldaria]

The purchase price of the property is $ 176,708. The reason why there was a first appraisal is because the lender would not finance the building lot we originally chose. We chose another lot, in another development, with the same house plans and specs, in the same city and school district. The second appraisal was done because the building lot changed. My concern is this is a USDA direct loan. If the house appraises under the purchase price then we come out of pocket for the difference. Both lots appraised for 28,000 on auditors website. With the same comparable being used by both appraisers wouldn't the value be close to the same? Also why does the appraiser now need the warranty deed to look at the appraisal and get a more accurate appraised value?

 

[angeldaria]

Values for 1st appraisal:

Cost Approach: $ 180,900
Sales Comparison approach : 179,000

Values for 2nd (current)appraisal:

Cost approach: $ 190,880
Sales Comparision approach: $ 160,000

 

[AnonApprsr]

Spend 500 dollars and hire a local professional appraiser. Ask them to review the appraisals, and, if necessary, form his own opinion of value if he finds he has to. He will have to come up with his own appraisal (value) if he finds both them to be lacking.

It's the only way to know. It's worth every penny so you don't wonder for years "what if..."

 

[Tim The Enchanter]

A difference of 5% is not usually considered significant.
I've seen an appeal form from one client that says the appealing person has to be looking for a value 10% or more different, just to file the form.

 

[Webbed Feet]

Had two different appraisals completed due to changing building lots during financing. The current appraisal came in 20,000 lower than the first . The home is new construction. The house plans and specs did not change, the market did not change (so you say), both building lots are located in the same city/school district. Both building lots appraised for the same value according to audutors office (if you mean the tax assessor's office that has no bearing on this whatsoever) . Both appraisers used the exact same comparables in appraisal report but adjusted comparalbes using very different value assignments. (Sorry, the appraisers do NOT have to agree on what or how to adjust.) The appraisal reports were completed within 1 month of each other. The first appraisal was completed by a local appraiser. The second appraisal completed by out of town appraiser located over 100 miles away. There is no evidence in the out of town appraisal report that the appraiser consulted with anyone locally familiar with our market. (The location of an appraiser's office has no bearing on anything other than disgruntled people wanting to try to claim it does. If the appraiser is already acceptably familiar with that local market, per reasonable standards of our industry, the appraiser is NOT required to consult with anyone at all. ) First appraiser has been doing appraisals since 1992 while the second appraiser since 2007. (And if the values were reversed I suspect you'd not tell us that small point at all. Ok, so the second appraiser has not been licensed as long, so what? I've found all sorts of old long time appraisers that make so many mistakes your head would spin.) The second appraiser will look at appraisal again but wants the warranty deed to do so. I am concerned about the accuracy of the current appraisal due to the appraisers lack of knowledge of our real estate market and why would he/she need/request the warranty deed for the building lot to give a more accurate appraisal? Any insight into this would be appreciated.

Per our standards our appraisals do not have to be "accurate," they have to be credible. You only see the word "accurate" on Fannie forms because Fannie Mae is a doofus. A real estate appraisal is, by definition, an opinion of value. Opinions, by the very nature of the beast(s) cannot be "accurate."

What you've not told us is anything about the general range of value of the property. I bring this up because a $20,000 difference regarding something worth over $300,000 (or say far more?) could be so minuscule a difference to real estate appraisers (and the market) that for all intents and purposes the two appraisals are both highly credible.

 

[angeldaria]

Webbed feet although I appreciate your response, please know that my post was only to understand the appraisal process and the appraisal results that I have been given to review concerning my particular situation. In posting my question it was not my intention to be attacked for my lack of knowledge of real estate appraisal. I have no knowledge of the rules, policies, or practices of the real estate appraisal profession hence my visit and posting my question to this website. Your sarcastic, defensive, and at times condescending remarks were not at all helpful to me and I'm sure not helpful to the general public who are visiting this site to try and educate themselves on how the real estate appraisal process works.

 

[josephdifranco]

I agree with the post about appraisals being opinions. I've seen widely differing appraisals from high level experienced appraisers.

Since you have an over 10% difference on the two reports and it is a more simple property type, you may have some cause to scratch your head.

However, you say you went to another development. Are all the physical characteristics the same?...size, frontage, view, etc?

If the lots are the same but one development typically has higher priced homes, land values would tend to be higher there. There are many factors to consider.

Anyway, your first appraisal is dead because your not buying anything in that subdivision. You might be able to make a case to the lender that you'd like appraiser #1 to re-appraise your new property based on his superior credentials. However, in the end, its still not surprising to me that the values came in with the 20k difference, the process is both art and science.

Best of luck, let us know how it turns out.