Financing in 30141>Question Details

Saleswarden, Home Owner in 30141

What should a seller do when the contract (contingent on appraisal) falls apart due to a "bad" appraisal.?

Asked by Saleswarden, 30141 Sat Aug 27, 2011

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Rodney I'm going to slice words with you - in my experience (both as a broker and appraiser) appraisals can be challenged under the current HVCC environment.

The key is that there needs to be a material basis; agents have to provide data that meets the underwriting requirements and show that the data should have been considered or is better than what the appraiser used. Once assembled, it's often up to the underwriter to decide whether it''s valid and if so, it'll go back to the appraiser. If the job was ordered through a management company, the appeal goes to them.

No smart agent wants to be in an appeal position, most are a waste of time and not overturned. The vast majority of agents don't provide compelling evidence and their objections are often baseless. Disagreements are fine but most agents that are asked to provide support just try to BS it with data that doesn't meet appraisal requirements.

As I said earlier - smart and experienced agents know what the appraiser will see and ensure that this information is made available to them. HVCC does not prohibit agent/appraiser communicaton; it prohibits coersion and manipulation. There is nothing wrong with leaving an info packet for an appraiser to review.

The sniveling by most agents about this is due to ignorance of the process. If agents would take the time to grab a class or two and stay current on things then maybe they would do better with values. The best way to avoid issues is to be well prepared, something that seems not to have happened with Saleswarden.

Hank
1 vote Thank Flag Link Sat Aug 27, 2011
I've been appraising since '89, the last few years this is more of a problem than ever before. Shane asks the right question - is it bad because it's not the sale price? That's not a bad appraisal, that's the market. The appraiser cares less about hitting values, they care about proper reports. So unless errors are in there - factual, not differences of opinion - it's not bad it just doesn't jive with what you want.

Your agent better not be "sitting tight" - he/she better be coming up with something to refute the opinion. A listing agent should always take control of this before it becomes an issue - there are many ways and your agent should have been ahead of the problem. If the data is there, it needed to have been in the appraiser's hand; you cannot expect appraisers to do this anymore.

If I'm the buyer's agent, I'm pushing you to the appraised value; this is good for the buyer. Getting a second appraisal would do nothing for me as their agent, I have a bank appraisal and wouldn't tell my buyer to do anything less than expect that to be the new price.

There's a chance errors could have been made but your agent needs to check that out. I've dealt with too many dumb agents about appraisals - tell your agent to get familiar with our requirements and submit data based upon that. Anything less or not factual is a waste of time.

You'll find my appraisal posts helpful - including - How to Challange an Appraisal - http://hounddogrealestate.com/category/appraisals-valuation/

Hank
1 vote Thank Flag Link Sat Aug 27, 2011
What is "bad" about the appraisal?
1 vote Thank Flag Link Sat Aug 27, 2011
Saleswarden - this is all dependent on the exact purchase and sale agreement in place between the two parties and the specific provisions related to the appraisal contingency that is apparently in place, doesn't it?

"Bad" appraisal . . . Hank said it best: "The sniveling by most agents about this is due to ignorance of the process. If agents would take the time to grab a class or two and stay current on things then maybe they would do better with values. The best way to avoid issues is to be well prepared, something that seems not to have happened with Saleswarden."
0 votes Thank Flag Link Tue Aug 30, 2011
Your agent said to "wait" for the buyer's response?

I'm going to take a stab at ths, and say the buyer's response will be.....lower the price to match the appraisal!


Out of curiosity - how far off was the number?
0 votes Thank Flag Link Sun Aug 28, 2011
I have to side with Hank on this one. As the loan officer/processing, we will thoroughly review and if needed, appeal an appraisal, even before the underwriter gets it.

I am helped a Veteran in Norfolk, VA and even though VA reviewed the appraisal and issued their NOV, the seller & their agent appealed the value with the appraiser (and subsequently lost). Another transaction in Detroit, MI we appealed an appraisal by providing clear evidence that one of the comps used was a rehab project (the subject was in great condition, while this comp was a HomePath property with a demo'd kitchen - no adjustment was made) and that one increased the value by over 5% of the home's initial appraised value.

If a party to the transaction says "I don't think that value is accurate, and I have evidence to prove otherwise" then I would always be very interested to know what that evidence is. I would first discuss my initial thoughts with the parties involved, and if a mutual agreement is made, we'd present it to the appraisal management company and request comment.
0 votes Thank Flag Link Sun Aug 28, 2011
Yes, appraisals can be appealed. The appeal must come from the underwriter though. No other party has the authority to dispute an appraisal.

Supporting documentation must be submitted for the underwriter to review. Should the underwriter not agree to a dispute, then the issue ends there. More often than not, there is no real basis for an appeal to an appraisal.
0 votes Thank Flag Link Sun Aug 28, 2011
Before anyone can give you a proper answer to your question, you need to define what is “bad” about the appraisal report. Simply not coming in at the sales price does not make it “bad”. It’s more likely just an indicator of the current market values of your immediate area. An appraiser is given the assignment of coming up with an “opinion of value.” This is known as the appraised value.

To arrive at an appraised value, the appraiser will used 3-4 closed sales. They will often also add one pending sale and one active listing. Closed sales should be within the last 90 to 180 days with none being over 12 months old.

Contrary to what other answers may imply, the seller, buyer, or agent cannot dispute an appraisal. Only the underwriter of the buyer’s lender has the authority to dispute an appraisal. This would only be done if the underwriter feels as though the report is flawed. Should there be grounds to dispute the appraisal, the agents will need to provide comps which would be more similar and supportive. There are regulations in place that prohibit anyone from influencing an appraisal to arrive at a specific value.

If it is an FHA appraisal, the report remains tied to the property for 120 days. Any new buyer would have to use the same appraisal report if they obtain FHA financing.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia
Web Reference: http://www.rodneymason.com
0 votes Thank Flag Link Sat Aug 27, 2011
If the appraisal is "bad" because it came in lower then the agreed price, it could be the reality of the market....
0 votes Thank Flag Link Sat Aug 27, 2011
Thanks for your prompt replies. We just received the report and our agent says to sit tight and wait for the buyers response. I just wanted to dig deeper and to see if there is a way to refute, work around the issue. Hard for me to sit tight, so this was one way to do a little reseach.....
0 votes Thank Flag Link Sat Aug 27, 2011
Hello Saleswarden,
You may wish to have another appraisal done to determine the accuracy of the first one. If that appraisal comes in with a similar value then you might have to consider lowering your sales price and negotiating with your buyers.

Good luck!

Laura Feghali
Prudential Connecticut Realty
0 votes Thank Flag Link Sat Aug 27, 2011
What does your listing agent say, Saleswarden? If you're not represented by one, please email or call and we will try to help. Good Luck!

Michael Hammond
SellsRealty@gmail.com
404-538-5499

http://www.georgiamls.com/agentsite/index.cfm?SiteID=HAMMONDJOHNM

http://www.chapmanhallprofessionals.com
0 votes Thank Flag Link Sat Aug 27, 2011
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