I don't know anything about this particular property or its value, but my question to you as the buyer would be why you want the appraised value to be increased? Do you believe the seller will be unwilling to sell it for the lower appraised price if it won't appraise for more? I don't mean to imply that there is a right or wrong answer, but if I were a buyer in this circumstance I might be more inclined to find away to get the purchase closed at the lower price.
Assessed values for tax purposes are not reliable indicators of market values. Tax assessments are usually based on very old market data, and very incomplete details about the current condition of the property which greatly influences market value. Assessed values lag the market significantly and only very roughly approximate it.
I hope this is at least somewhat helpful. though it doesn't directly address the solution you've asked for. I wish you well and the best of success in resolving this problem to a satisfactory outcome.
I am currently a Listing Agent in this situation. The appraisal (FHA) came in $20K low. Bad appraisal. Still waiting to see what buyers are going to do. My sellers are not going to lower their price $20K because like your situation, we all know the value of the home (both myself and the buyers agent did a comparative market analysis and we both came up with the contract price).
Not the first time this has happened. I had another listing last year that had the same thing happen - except that one (also FHA) came in $60K low. The buyers wouldn't pay the difference and there was no way my sellers were going to lower their price by $60K because the appraiser did a bad appraisal. The buyers agent and I even paid to have a 2nd appraisal done (making sure it was done by another FHA approved appraiser). The 2nd appraisal came in where it needed to but the first FHA appaiser wouldn't revise his appaisal. Since it was an FHA loan/appraisal, the bad appraisal stuck with the property for anyone doing an FHA loan - for 6 months. So, the buyers lost their dream home and my sellers sold to buyers not using FHA - for full price.
My goodness-- usually the tax assessment is much lower than market value so you have good reason to be concerned. I have appealed two recent appraisals and WON both appeals. At the very least your agent needs to correct the inaccuracies and find comps that meet lenders standards--i.e. square footage much be within an acceptable range to the subject property and must within a certain proximity.
Best of Luck,
Did he have any split levels for comps? If so, how did he treat the square footage on those and also how did he treat the below grade rooms?
I would love to check out that appraisal as well as the other comps that you have that aren't being used.
25k off of a 200k sales price (12.5%!!) is a huge disparity.
-We are attempting to use FHA so unless this appraisal gets overturned we are stuck
-If this apprasial does not get overturned we need to go with a new lender because the current one will stick with the low ball
-If we push to renegotate for a price lower than what the house is worth, we will lose it to another buyer.
Our current plan is to hope the comps that justify this house is worth at least $200,000 and continue that way. If that doesnt work we will have to go traditional financing with a new lender. Thankfully we have the savings, credit scores and financial stability to do so. This will also give us a second appraisal. If the second one comes back low - then I feel its time to negotiate with the seller because it almost takes other buyers out of the equation. Its no longer one back or one bad document - it then becomes reality.
For all of you worried about us paying more than the house is worth, I assure you this is not a concern. No one was worried about the appraisal because everyone who works in real estate in this area feels we got the house for a steal. Everyone thought it would appraise higher. Our main issue is that this home is a split level ranch. Our third bedroom and family room are on the bottom level, which is only 80% above grade (walk out basement oversized windows, definately not a traditional basement). So our 2000 sq ft, 3 bedroom 2 bath house is being appraised as a 2 bedroom 2 bath house at 1300 sq feet. While we are aware that it is standard practice to do so, usually that extra 700 sq ft is added into the value of the home somewhere because it is fully usable living space. This appraiser is saying that it has no relevance to the value of the home.
I'm very puzzled by your question. Why would you want to pay more than the home is worth?
While the Realtors involved with your transaction might not agree with the appraiser, very often the value is what it is. Today, appraisers have very strict guidelines they must follow by the lenders. In 13 years of being in the mortgage industry, I'm not aware of anyone going off "tax assessments" for a home value.
Let's say the appraiser brought in the higher value and you thought everything was running smooth..until your appraisal went to the appraisal review department. In the review process, the lender double checks the facts/value and will agree or disagree. Lenders are not willing to lend on over-valued property unless the borrower is willing to bring in a larger downpayment. Honestly, I don't see many borrowers wanting to pay more money for a home than the appraised value.
I wouldn't be so quick to judge the appraiser. He likely did you a favor and saved you a bundle!
Cheryl Garner, Mortgage Expert
Fairview Mortgage Capital, Inc.
Hope this helped