Reconsideration of value declined

[skc26]

I’m currently in the process of refinancing my rental property (ZIP code 76011), and I’ve run into issues with the appraisal that I’d like some input on.

The property is located in an entertainment district where short-term rentals are legally permitted, which creates a unique buyer pool and limited inventory. Although it’s legally classified as a single-family home, it’s actually an attached townhome and is relatively new (less than 5 years old).

Before the appraisal, I worked with a realtor to analyze comps. Based on nearby sales—including older homes from the 1960s selling for $235+ per sq ft—we estimated a reasonable range of $220–$240 per sq ft. The lender agreed with this range and provided pricing accordingly.

However, when the appraisal came back, the appraiser did not use any comparable properties from within my ZIP code. One of the comps was located more than five miles away, and the resulting valuation came in at under $190 per sq ft.

I submitted a reconsideration of value (ROV) with better comps from within the ZIP code. The appraiser increased the value by $10K, but still did not use any local comps and instead added a rental analysis that didn’t seem relevant. No location-based premium was applied.

I requested a second ROV. This time, I provided seven strong comps within 0.5–2 miles of my property—all townhomes, condos, or similar SFHs sold within six months, most within 30 days. I also specifically asked why no local comps were being used and why no location adjustments were made.

The lender has now informed me that the second ROV was declined.

At this point, I’m trying to understand my options. Has anyone dealt with a similar situation? What would you recommend as next steps?

 

[KeyWhiz]

My understanding is that the Reconsideration of Value process is pretty much a one-shot deal. I certainly don't recall ever having been asked to do so twice. Your best options from here are probably to either ask the lender if they would be willing to order another appraisal from a different appraiser, or find a new lender and start over.

 

[Surf Cat]

Although it’s legally classified as a single-family home, it’s actually an attached townhome and is relatively new (less than 5 years old).

It's hard to get the gist of the situation based upon your description. But if it were me doing the assignment, I would look for attached townhomes as I bolded above.

How many Townhomes are attached in your newer 5-year development? Do you own the land that the improvements are on? Are there HOA dues? Common areas or a community swimming pool? How could "the lender" agree to yours and your Realtor's price per square foot determination?

An appraiser is going to look for like for like sales that are comparables to your attached townhome. I wouldn't look at a 1960s single family residence owning the land and improvements as you described above as a competitive sale to what you have.

Maybe that's why the appraiser went so far out? Since your sale is only 5 years old, I would also research your sale 5 years ago in comparison to detached Townhomes to ascertain what the market perceived to be the difference between attached and detached Townhomes. That way, I could derive a % for that difference and probably adjust a detached townhome in your immediate area accordingly as I would want a sale in close proximity to yours. I would also want attached Townhomes like you have in the report.

Once again, just guessing based on your description.