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Overvalued Appraisal

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snowchild

Freshman Member
Joined
Jul 21, 2017
Professional Status
General Public
State
Montana
My question to the members is about a property I own that appears to have been grossly overvalued.

The property is 5 acres of land with a newly constructed 4000sf home, 1400sf 3 bay garage and a 4000sf heated and insulated commercial shop. The property in the right location would be worth upwards of 2 million but in this case it is in an isolated rural location in NE Montana near the Canadian Border where the above average home sale prices are in the $4000K area. This is surrounded by farmland.

I purchased the property in 2000 for $25,000 and at the time it had a 1400sf basement only house with a roof on it that was only 3ft above grade. I started a business there which was manufacturing items that I sold on the internet. Over the years the property grew and in 2008 I built the steel shop and in 2012 I took a 150K construction loan with a local bank to build the house on top of the existing basement. The bank ordered an appraisal for purposes of the loan which valued the property at 280K AFTER the house was built.

With the house finished in mid 2014 and a cost overrun of 50K, I took the property to Quicken Loans for a 30year conventional loan. They ordered an appraisal and could not find an appraiser to do it. They asked me if I knew anyone and after asking around was given the name of an appraisal service in Plentywood MT, some 100 miles to the east of us. I passed the name on to quicken and they hired them.

The appraised value came in at $650K which was very surprising to me but I said terrific! I would use the opportunity to pay off the existing construction loan and some other outstanding debts so I took on 400K with the thought that I still had 250K of equity.

A year later my common law husband walked out on me causing my business to all but fail and leaving me sitting high and dry in the middle of nowhere with a large debt to pay. I decided to sell the property and had trouble finding a local realtor to take it on at the appraised value. I then found a sympathetic realtor who marketed it for a year locally and over the internet, starting out at $500K and eventually down as low as $350k which was below what I owed. In all this time he had only 2 inquiries and 1 showing. None of those were financially qualified.

In Oct 2016, I walked away and moved to Florida. I continued to pay the Mortgage till January of 2017 but then had to stop due to financial hardship. Quicken offered me a deed in lieu with a 1099 hit for the difference which could have been substantial. I looked at bankruptcy but since my business was still bringing in the majority of my income I would have had to lose that in bankruptcy. So, in June 2017 I made a deal to do a mortgage modification and move back to the property.

Last week I paid for a reappraisal from the same appraiser that did the appraisal for the bank in 2011 and she said to me that based on the location, she does not understand where his number came in at $650K. She didn't think it will come in at 450K. Still waiting for the result. The Tax assessed value is $385K.

So... what now? Can I sue someone for getting me in over my head or am I just on my own? I appreciate any advice I can get. Thanks for your time.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
I purchased the property in 2000 for $25,000 and at the time it had a 1400sf basement only house with a roof on it that was only 3ft above grade. I started a business there which was manufacturing items that I sold on the internet. Over the years the property grew and in 2008 I built the steel shop and in 2012 I took a 150K construction loan with a local bank to build the house on top of the existing basement. The bank ordered an appraisal for purposes of the loan which valued the property at 280K AFTER the house was built.

With the house finished in mid 2014 and a cost overrun of 50K,


I took the property to Quicken Loans for a 30year conventional loan. .

You took a mixed use property, residence and manufacturing facility to Quicken Loans for a ............"Residential" Loan????

They ordered an appraisal and could not find an appraiser to do it. .
Hint, hint.


They asked me if I knew anyone and after asking around was given the name of an appraisal service in Plentywood MT, some 100 miles to the east of us. I passed the name on to quicken and they hired them. .

What happened to the appraiser from the local bank that did the construction loan?


The appraised value came in at $650K which was very surprising to me but I said terrific! I would use the opportunity to pay off the existing construction loan and some other outstanding debts so I took on 400K with the thought that I still had 250K of equity. .

So you knew something wasn't right with the value, but you took Quicken's money anyway, and now you want to sue someone else?

I then found a sympathetic realtor who marketed it for a year locally and over the internet, starting out at $500K and eventually down as low as $350k which was below what I owed. In all this time he had only 2 inquiries and 1 showing. None of those were financially qualified..

The joys of selling over the internet, were you trying to short sell your property?? If so, this may be where the "not financially qualified" issue arose.


Last week I paid for a reappraisal from the same appraiser that did the appraisal for the bank in 2011 and she said to me that based on the location, she does not understand where his number came in at $650K. She didn't think it will come in at 450K. Still waiting for the result. The Tax assessed value is $385K.

So... what now? Can I sue someone for getting me in over my head or am I just on my own? I appreciate any advice I can get. Thanks for your time.

Best Advice is best hope Quicken doesn't read this and figure out who you are.

.
 

nstanbru

Senior Member
Joined
Feb 19, 2009
Professional Status
Certified General Appraiser
State
California
Can I sue someone for getting me in over my head or am I just on my own?

I think the person best qualified to answer that question would be an attorney who specializes in real estate issues.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Snowchild said,

"So, in June 2017 I made a deal to do a mortgage modification and move back to the property.

Last week I paid for a reappraisal from the same appraiser that did the appraisal for the bank in 2011 and she said to me that based on the location, she does not understand where his number came in at $650K. She didn't think it will come in at 450K. Still waiting for the result. The Tax assessed value is $385K."

Appraisals are an opinion of value, they aren't designed to be the 'right' number that makes everything work. I assume Quicken hired an appraiser and you didn't directly engage the appraiser. I'm not understanding how a "low" appraisal benefits you.
 

snowchild

Freshman Member
Joined
Jul 21, 2017
Professional Status
General Public
State
Montana
You jump to conclusions. It is very common to have this type of mixed use property here in farmland. Every farm here has outbuildings such as this with a home on the same piece of land.

So you are saying it's my fault that I relied on an appraisal to determine property value and equity. That being the case what is the purpose of an appraiser in the first place if not to determine a fair market value?
 

snowchild

Freshman Member
Joined
Jul 21, 2017
Professional Status
General Public
State
Montana
Snowchild said,

"So, in June 2017 I made a deal to do a mortgage modification and move back to the property.

Last week I paid for a reappraisal from the same appraiser that did the appraisal for the bank in 2011 and she said to me that based on the location, she does not understand where his number came in at $650K. She didn't think it will come in at 450K. Still waiting for the result. The Tax assessed value is $385K."

Appraisals are an opinion of value, they aren't designed to be the 'right' number that makes everything work. I assume Quicken hired an appraiser and you didn't directly engage the appraiser. I'm not understanding how a "low" appraisal benefits you.


A low appraisal doesn't benefit me any more than a high one does. I ordered this new appraisal to know what the property is "Really" worth. If this one is also just an opinion and everybody has one, what is the purpose of an appraisal in the first place .. I could just ask my neighbors and get a better result!
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
You jump to conclusions. It is very common to have this type of mixed use property here in farmland. Every farm here has outbuildings such as this with a home on the same piece of land.

So you are saying it's my fault that I relied on an appraisal to determine property value and equity. That being the case what is the purpose of an appraiser in the first place if not to determine a fair market value

I jumped to no conclusion, only re-printed what you said.

It matters not if every property has a barn.
You were operating a manufacturing facility, by your own statements.

Manufacturing is a commecial use.

YOU applied for a residential loan through Quicken

YOU recommended the appraiser.

YOU took the money when you knew it was too much.

YOU did not make sure your business partner/significant other/husband was not financially tied or liable for any of it.

YOU are the one defaulting on the loan.

These are the facts as I read from what you wrote.

Another piece of good advice would be for YOU to search the internet for FDIC cases where property owners were sued for mortgage fraud since 2006 in your state. See if you can figure out what actions the property owners committed for the FDIC to sue them, and then pull your Quicken loan application and see if you committed any of those same actions.

That and hire an attorney.

.
 

snowchild

Freshman Member
Joined
Jul 21, 2017
Professional Status
General Public
State
Montana
I jumped to no conclusion, only re-printed what you said.

It matters not if every property has a barn.
You were operating a manufacturing facility, by your own statements.

Manufacturing is a commecial use. QUICKEN WAS AWARE OF THAT .. THEY HAD PICTURES .. I DID NOT HIDE THAT FROM THEM

YOU applied for a residential loan through Quicken I APPLIED FOR A MORTGAGE .. THEY HAD THE RIGHT TO REFUSE .. THEY DIDN'T

YOU recommended the appraiser. I DID NOT "RECOMMEND" I WAS ASKED BY QUICKEN FOR NAMES AND I PASSED ON THE NAME

YOU took the money when you knew it was too much. I DID NOT "KNOW" IT WAS TOO MUCH .. I SAID I WAS SURPRISED ..

YOU did not make sure your business partner/significant other/husband was not financially tied or liable for any of it. TRUE but he did not own the property so it made no difference and that is neither here nor there

YOU are the one defaulting on the loan. I AM NOT IN DEFAULT. I AM BACK IN THE HOME AND PAYING THE LOAN

These are the facts as I read from what you wrote.

Another piece of good advice would be for YOU to search the internet for FDIC cases where property owners were sued for mortgage fraud since 2006 in your state. See if you can figure out what actions the property owners committed for the FDIC to sue them, and then pull your Quicken loan application and see if you committed any of those same actions.

That and hire an attorney.

.
 

snowchild

Freshman Member
Joined
Jul 21, 2017
Professional Status
General Public
State
Montana
Wow .. I came to get some advice, was beaten to a pulp ... ya'll must know my husband!
 

JTip

Elite Member
Joined
Oct 12, 2004
Professional Status
Certified Residential Appraiser
State
Pennsylvania
The appraised value came in at $650K which was very surprising to me but I said terrific!


Nobody twisted your arm to take ALL of the money. You should have taken what you could AFFORD.

I could qualify for three to four times what my current house is worth (on paper) but I know dedicating one paycheck per week is realistic, safe and logical.

You walked away, credit smeared for a few years......I hope you learned a valuable lesson.....
 
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