Low Appraisal, Items Not Counted, And A Deal Lost

[egmr]

Good Afternoon. Thank you to all appraisers who read and respond to this post!!

Here are the facts.
We had a contract for $71,700 on a 2 BR/1BA home 2 Gar., AC, F/P, new kitchen appliances. 1202sf. Lot size is .31ac. Completely remodeled. Never lived in.
Granite tops in kitchen and bath, new plumbing throughout, new fixtures (lights, faucets etc), tile floors (kit/ba), tile backsplash, tile tub/shower, all new paint, refinished wood floors. All work professionally done.

The FHA inspector/appraiser came in with an appraisal nearly $10,000 (62,000) under the contract price.

He gave no credit for the lot size, new appliances, f/p. He deducted 4,000 for 1 less bedroom than 3 of 4 comps. The fourth comp was completely out of the neighborhood but was a 2 bedroom. It was also located in a known prostitution area. The appraised home is on the edge of a very prominent neighborhood. He also gave the home a C3 rating, I and my realtor felt it should have been C2 since it was completely remodeled and never lived in.

My realtor submitted at least one additional comp to the underwriter to be forwarded to the appraiser along with our concerns about items not accounted for. Most notably the lot size. The three most reliable comps had lot sizes ranging from .10 to .19 I wanted a field inspection, something my realtor had never encountered. It is my understanding that the underwriter has the power to ask the mortgage (bank) company to go and look for themselves and decide if another appraisal is warranted, at their expense. This never happened. I am now stuck with this appraisal for at least 120 days the way I understand it.

I have doubts as to whether he ever looked at any part of the interior of the home except for the basement. I think this because he did not flag no smoke detectors or a light switch without a cover (exposed wires). His only photos were of the small leak in the pressure relief valve on hot water tank, some peeling paint on the garages, and one repair to wood siding.

What are your thoughts on this situation and do I have any recourse? Like filing an official complaint. Thank you again for you time. And I apologize for the length of this post.

 

[Michigan CG]

What is the name of the AMC (Appraisal Management Company)? Did he in addition to adjusting for the bedroom also adjust for the size of the home (GLA).

$4,000 for a bedroom? WTH? That is over 6% of the appraised value. Did he explain the adjustment for that?

For a house in that price range I would not be adjusting for lot size.

Are there condition adjustments to the comparables?

 

[Eli]

FYI ,

FNMA definition C2 condition rating:

The improvements feature no deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished, or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category are either almost new or have been recently completely renovated and are similar in condition to new construction.

*Note: The improvements represent a relatively new property that is well maintained with no deferred maintenance and little or no physical depreciation, or an older property that has been recently completely renovated.



And FNMA definition of C3 condition rating:

The improvements are well maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been well maintained.

*Note: The improvement is in its first-cycle of replacing short-lived building components (appliances, floor coverings, HVAC, etc.) and is being well maintained. Its estimated effective age is less than its actual age. It also may reflect a property in which the majority of short-lived building components have been replaced but not to the level of a complete renovation.

 

[Meandering]

What are your thoughts on this situation and do I have any recourse?.

Here are the facts.

Never lived in. = How old is the house you remodeled? How old is the roof?

new plumbing throughout, = small leak in the pressure relief valve on hot water tank,

new fixtures (lights, faucets etc), = a light switch without a cover (exposed wires)

all new paint, = peeling paint on the garages

refinished wood floors. = not new floors

All work professionally done. = no smoke detectors

The appraised home is on the edge of a very prominent neighborhood. = ??? Does this mean there is a slum on one side of the property and McMansions on the other side of the property?

Completely remodeled.
He also gave the home a C3 rating, I and my realtor felt it should have been C2 since it was completely remodeled and never lived in.

How old is the roof? Siding? Refinished floors are not new floors. Did your Realtor explain the difference between remodeling and renovation?

So these are the inconsistencies in what your posted. I don't understand the "known prostitution area" comment. If prostitution is illegal, where are your police? As for us, we have fair housing laws to abide by, so you would need to show the prices of similar homes there, vary, based on location, to the prices of similar homes in your neighborhood.

Other than you being angry, I don't see any question we could help you with.

I wanted a field inspection, something my realtor had never encountered. = A field REVIEW maybe??

It is my understanding that the underwriter has the power to ask the mortgage (bank) company to go and look for themselves and decide if another appraisal is warranted, at their expense.

Don't hold your breath on them coming to look at your property. They could ask for another appraisal, but would have to explain to FHA why.

I am now stuck with this appraisal for at least 120 days the way I understand it. Nope. check the FHA case number with FHA. If they never got the appraisal, then it did not happen as far as FHA is concerned. However a conventional lender will not have record of an FHA case number where the loan did not happen.

Perhaps you need a more knowledgeable salesperson, not just one that will tell you what you want to hear.

.

 

[JTip]

Do tell the PRIOR sales price of the house.

Completely remodeled. Never lived in.

I bet it's a flipper.

You should thank the appraiser for saving you $10,000. Doughnuts are nice or some bagels for breakfast.

 

[Evincere]

Good Afternoon. Thank you to all appraisers who read and respond to this post!!

Here are the facts.
Completely remodeled. Never lived in.

.

Me thinks what you are really saying is - never lived in since it was purchased from the former owner and remodeled.

 

[egmr]

What is the name of the AMC (Appraisal Management Company)? Did he in addition to adjusting for the bedroom also adjust for the size of the home (GLA).

$4,000 for a bedroom? WTH? That is over 6% of the appraised value. Did he explain the adjustment for that?

For a house in that price range I would not be adjusting for lot size.

Are there condition adjustments to the comparables?

He is his own company. Licensed in another city but still in the county. With that said, his city of license and the city of the home are two different worlds. country vs. city
No, he refused to explain anything.
What does price range have to do with lot size? If anything, it is a big plus. MOST homes in the city do not have a double lot which is very desirable. This is according to my agent and myself. I have lived in the city for 21 years.
They are all listed as C3

 

[egmr]

FYI ,

FNMA definition C2 condition rating:

The improvements feature no deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished, or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category are either almost new or have been recently completely renovated and are similar in condition to new construction.

*Note: The improvements represent a relatively new property that is well maintained with no deferred maintenance and little or no physical depreciation, or an older property that has been recently completely renovated.



And FNMA definition of C3 condition rating:

The improvements are well maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been well maintained.

*Note: The improvement is in its first-cycle of replacing short-lived building components (appliances, floor coverings, HVAC, etc.) and is being well maintained. Its estimated effective age is less than its actual age. It also may reflect a property in which the majority of short-lived building components have been replaced but not to the level of a complete renovation.

There is no "normal wear & tear" since it has been empty. The appliances have been there since March. Unused. The flooring is all new and unused. With the exception of the wood floors which are original and have been refinished (sanded, stained and poly.) professionally. The paint on the interior is all new. The light fixtures are all new. The outlets, switches new. Faucets, shower heads, sinks, counters all new. Basically, only the furnace (which is in perfect condition, has been serviced and maint.) hot water tank, toilet, tub and kitchen cab. remain.
I do not know the age of the roof. However, it is one layer and in good condition.
The small leak @ hot water tank and the garage paint were already on my list of chores. I just did not get them completed prior to him showing up. These 2 things were not a surprise.

 

[Eli]

There is no "normal wear & tear" since it has been empty. The appliances have been there since March. Unused. The flooring is all new and unused. With the exception of the wood floors which are original and have been refinished (sanded, stained and poly.) professionally. The paint on the interior is all new. The light fixtures are all new. The outlets, switches new. Faucets, shower heads, sinks, counters all new. Basically, only the furnace (which is in perfect condition, has been serviced and maint.) hot water tank, toilet, tub and kitchen cab. remain.
I do not know the age of the roof. However, it is one layer and in good condition.
The small leak @ hot water tank and the garage paint were already on my list of chores. I just did not get them completed prior to him showing up. These 2 things were not a surprise.

I wouldn't focus too much on the condition rating, because there are bullet holes in your argument. Value is your concern. Did the appraiser use the most similar and closest comparables? Were the appraiser's comparables similar to your property in condition? Did they bracket your property in condition (one at least as good and maybe one not as good or one better)? Basicly, were the most similar recent sales used and were significant differences between the comparables and your property taken into consideration? It is much deeper than that relative to recognized methods and techniques utilized in the sales comparison approach, but those would be the questions I would focus on if I were in your shoes.


Please note the following from the C2 definition (my underlines):

Dwellings in this category are either almost new or have been recently completely renovated and are similar in condition to new construction.

*Note: The improvements represent a relatively new property that is well maintained with no deferred maintenance and little or no physical depreciation, or an older property that has been recently completely renovated.

 

[egmr]

Here are the facts.

Never lived in. = How old is the house you remodeled? How old is the roof? Home was built in 1940. 2/3 comps are built in 1941 and the third in 1952

new plumbing throughout, = small leak in the pressure relief valve on hot water tank. We had just had the pilot lit about 2 weeks prior to him coming. We were not aware it leaked until then. I knew we would be fixing this.

new fixtures (lights, faucets etc), = a light switch without a cover (exposed wires) This is upstairs and simply got forgotten about. I have no problem fixing, I do wonder why it was not cited as a safety issue.

all new paint, = peeling paint on the garages I also expected this and fully expected to repair. Since my mom was sick during the end of the reno. and weather played a factor it simply was not completed before we got a contract.

refinished wood floors. = not new floors No, not new. BUT, professionally re-done. We did not do this ourselves, it was contracted out. These are in the LR, DR, 1 BR and small hallway

All work professionally done. = no smoke detectors They were onsite, but, hadn't been installed. Again, due to illness in my family it simply was forgotten.

The appraised home is on the edge of a very prominent neighborhood. = ??? Does this mean there is a slum on one side of the property and McMansions on the other side of the property? No, it does not. The fourth comp is on the NW side 4 blocks out of downtown. My home is located on NE side, 21 blocks from downtown.

Completely remodeled.
He also gave the home a C3 rating, I and my realtor felt it should have been C2 since it was completely remodeled and never lived in.

How old is the roof? Siding? Refinished floors are not new floors. Did your Realtor explain the difference between remodeling and renovation? I do not know age of roof, I do know it is one layer and in good condition. The new floors (tile) are located in the kitchen and bathroom. No, she did not say there is a difference, please explain.

So these are the inconsistencies in what your posted. I don't understand the "known prostitution area" comment. If prostitution is illegal, where are your police? As for us, we have fair housing laws to abide by, so you would need to show the prices of similar homes there, vary, based on location, to the prices of similar homes in your neighborhood. FYI, there are known prostitution areas in every town, even yours.

Other than you being angry, I don't see any question we could help you with. Yes, I am angry. and frustrated. I didn't sell this house because of him. I just want to understand and know what my rights as the seller are.

I wanted a field inspection, something my realtor had never encountered. = A field REVIEW maybe?? Okay, REVIEW. I still wanted one.

It is my understanding that the underwriter has the power to ask the mortgage (bank) company to go and look for themselves and decide if another appraisal is warranted, at their expense.

Don't hold your breath on them coming to look at your property. They could ask for another appraisal, but would have to explain to FHA why. Yeah, so what, let them explain. If they had actually come out and looked they would see that the home is worthy of a higher appraisal. This deal is dead so, noone is coming out. This I know.

I am now stuck with this appraisal for at least 120 days the way I understand it. Nope. check the FHA case number with FHA. If they never got the appraisal, then it did not happen as far as FHA is concerned. However a conventional lender will not have record of an FHA case number where the loan did not happen. I will be checking on this today. Your comment is opposite of what I was told. Thank You.

Perhaps you need a more knowledgeable salesperson, not just one that will tell you what you want to hear. No, actually she does not tell me what I want to hear. She is blunt, and isn't afraid to speak her mind. I actually do want the truth and dont want any smoke you know where. Even if I dont like it. I do push back though until I fully understand. Which is part of the "point" of my post. She has been in this town for 25+ years, comes very highly recommended and sells a ton of houses.

.