Financing in Bay Minette>Question Details

Carol Snow, Home Buyer in 01085

how can a house be appraised for 127,000 in 2010 and reappraised a year later for 86,000?

Asked by Carol Snow, 01085 Thu May 5, 2011

We have found a lovely historic house that came on the market due to the owner being relocated by their employer. She had purchased it 2010 for 127,000 and after her downpayment she owes Wells Fargo bank 106,700. We offered 116,700 which was accepted and applied for a mortgage with RBC bank who had it reappraised resulting in an appraisal of $86,000. How can they do this to the seller. We understand that property continues to fall in value but this appears ridiculous and has caused the seller extreme anxiety wondering why this has happened and what she can do. She has no ability to make up the shortfall and although we love the house very much and it has passed a thorough inspection and even paying the seller for a few extra items that she has left in the house she will be in deep financial trouble and be unable to purchase another house. Does she have any recourse or can she contest this appraisal?? She is so distraught over this and so am I !!Help!!!

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Dan Tabit’s answer
Appraisals are not divinely inspired documents, they are opinions of value. They are more detailed that a typical agents Comparative Market Analysis but not necessarily more accurate. Two different appraisers can have two different opinions, but when it comes down to it the lender has to feel like there is enough value for them to make the loan.
In your situation we don't know if the 2010 appraisal was high, the new one is low or if both are accurate. Your lender can request an appraisal review, you can have the agent go over the comparables and see if the appraiser used the best comparables available or if they can suggest better ones.
I hope everything works out for you.
0 votes Thank Flag Link Thu May 5, 2011
The only work around I see is for you to go to another lender and see if the home appraises for a higher amount. That will mean a new mortgage application and a another appraisal fee to you If the result is similiar then the seller will have to face her realty and short sale the home to you instead because unfortunately it's not worth what you are willing to pay for it. Good luck.
0 votes Thank Flag Link Thu May 5, 2011
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