question about drive by appraisals

[trinity033007]

I recently applied and was approved for a home equity loan. They had mentioned a drive by appraisal. I have a couple of questions. First, how accurate is that appraisal. I am worried that the appraisal may be lower than what my home is actually worth. I have a lot of upgrades including a 700 sq addition in the back that you cannot see on a drive by. Second, what recourse do I have if I don't agree with the appraisal. The reason I am concerned, is we are close on a 80% loan to value. Also, is this more of a formality or is it sincerely an "appraisal". The lender is a well known bank, not a mortgage company. When I asked about the drive by, she said sometimes they request not to do a drive by but to come in, but that is rare and they did not ask that for you. Also, does the appraiser know the figures that are needed so to speak? Sorry this is so long, just need a little info....

 

[Lobo Fan]

Drive bys are as accurate as the data sources. If your addition was completed with permits and inspections it may have been added to the assessor's records. I would suggest you go on-line and check what public records are available on your home.

Drive bys include a lot of assumptions, such as square footage and condition. It is assumed that most subjects are the size noted in the public records and in avarage condition. If your home looks decent from the street then you should get the average nod. If there is ugliness, and serious issues such as missing roof shingles, broken eavesm damaged garage doors, poor landscaping, etc., you may get marked down.

Assuming that the data for your house is accurate, then drive bys can be pretty close. You won't get "credit" for every new light bulb, or the custom TP holder, but the comps should be selected with reasonable accuracy.

The key to accurate drive bys is the accuracy of the data for the subject property.

 

[Elliott]

Hi Trinity,
If you've got a 700 foot addition and need its value reflected
it would be a good idea to insist on a interior inspection, called
a 1004 form. The difference in cost is probably minimal ($50 to $75).

There are all kinds of home equity loan program and some do and some
don't charge for things like appraisals. If its a 'no' fee equity loan
they build all the costs of the loan into the interest rate.

In any event, if they really did do an appraisal, you are entitled to
get a copy of the report (Fair Credit Act), but then again, if its a
no fee home equity loan, you might not be charged and I don't
know if you'll get a copy. Might be they'll throw a AVM in your
loan file, so it will just be a number and they'll tell you, no there
isn't a report.

 

[trinity033007]

Hi Trinity,
Might be they'll throw a AVM in your
loan file, so it will just be a number and they'll tell you, no there
isn't a report.

Thanks for your replies, but what is an AVM....thanks!!!!

 

[Mike Kennedy]

Automated Valuation Model (AVM)
Computer generated estimate of residential property value, accepted by most lenders as a substitute for a full property Appraisal for second mortgage loans and home equity lines of credit. Valuations are calculated using computer software models and recent sales of similar homes.

I.E. "sight unseen - reliant upon often erroneous or outdated municipal records, commonly inflate the square footage of above grade living area by 50-100+% by including finished basement and/or outbuilding areas, may also include similar data extracted from actual appraisals which may or may not have been completed in compliance with the Uniform Standards of Professional Appraisal Practice. No they do not reflect interior quality and/or condition upgrades. No they do not reflect leaking roofs or flooded basements. Nor they do they reflect new roofs, the new deck, the $15 grand you spent upgrading to Andersen Windows, or the $30,000. you just spent on your new custom kitchen...... etc etc .

However, they are deemed by many lenders as "sufficient for their needs".

 

[Randolph Kinney]

Trinity,

I believe what the lender is basing most of the loan on is your credit score and debt to income ratio. Therefore the accuracy of the valuation (ie appraisal) is not that critical.

However, you mentioned 80% LTV (loan to value ratio). If you need all of that value to get the desired loan amount, then a drive-by appraisal with assumptions and minimal verification of what you actually have may not produce the desire results. If what you have is truly upgraded beyond what the average house is in the neighborhood, it is possible that the drive-by appraisal will not reflect that. However, for you to know that you are close to that ratio means someone has already performed a "value check", which could have been done either as a desktop appraisal or AVM.

I would not be surprised if the "appraisal" produced the value to bring in the loan.

 

[trinity033007]

thank you for your responses. I think what is concerning me is that there is about a 30-60K flucation on the houses in my neighborhood, actually on my street. So, that is what I think is concerning me.

 

[Randolph Kinney]

thank you for your responses. I think what is concerning me is that there is about a 30-60K flucation on the houses in my neighborhood, actually on my street. So, that is what I think is concerning me.

Are you getting that information from Zillow?

Did you tell the lender what you thought your home was worth? Are they proceeding to process the loan on that basis?

 

[trinity033007]

no, I got that information from a real estate agent. There are currently 3 homes for sale on my block, and 2 sold....there are approximately 250 homes on my block (I live in a huge developement). I am going by what they homes have sold for in the past couple of weeks. Also, they asked the value of my home, and I said I really did not know, about 315-330K but I don't know how accurate that is because we were appraised in april for 345K...So, I am thinking the prices have dropped since april. We need the appraisal to come back at 315K for the 80% LTV.

 

[Randolph Kinney]

no, I got that information from a real estate agent. There are currently 3 homes for sale on my block, and 2 sold....there are approximately 250 homes on my block (I live in a huge developement). I am going by what they homes have sold for in the past couple of weeks. Also, they asked the value of my home, and I said I really did not know, about 315-330K but I don't know how accurate that is because we were appraised in april for 345K...So, I am thinking the prices have dropped since april. We need the appraisal to come back at 315K for the 80% LTV.

Trinity,

You sound like your are on top of the real values in your neighborhood.