Home Buying in 19145>Question Details

golemaw, Home Buyer in Philadelphia, PA

How to adjust a low appraisal?

Asked by golemaw, Philadelphia, PA Thu Sep 13, 2012

We are buying an REO but received a much lower appraisal value. After looking at the appraisal, there were some key things that the appraiser didn't factor into his value.

- We have a 2 car driveway, his comparable sales all have 1
- The area is built semi-detached, but the house is a corner house. This is usually valued more in philly
- Some of his comparable sales are closer to lower value housing than us. (The neighborhood is new but surrounded by older row home housing on the north and west sides)
- The bank completely re carpeted and painted the house before listing

What are our options if the bank doesn't want to lower? Who should we contact to try and get the appraisal adjusted with the factors above.

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Honestly the lower appraisal is the Sellers issue at this point in time. While you may request that your lender challenge the appraisal, i can tell you that the chances of it's being modified are slight. My guess is that the property is located in what the appraiser considers to be an area of declining values. (This is a subjective determination based on sales price trends as well as the number of distressed properties currently on the market and either under contract or sold within the past 6 months)

The truth is you and your agent (hopefully you have a separate buyer broker and aren't using the listing agent as they get repeat business from the lender and aren't going to do anything to jeopardize this relationship) should be leveraging this appraisal to force the bank to accept the appraised value as the purchase price. While experience tells me that the asset manager will whine and kick and scream that ultimately they will accept this price. As dumb as most asset mangers are even they know that their fighting a losing battle as if they don't accept the appraised value their now forced to find a cash buyer. I'd suggest you dig in, tell the bank to take it or leave it an be prepared to walk if they refuse.
1 vote Thank Flag Link Fri Sep 14, 2012
Hello Golemaw,
With an REO .....it is what it is..... Always remember that an appraisal is a “Professional Valued Opinion" In all likelihood with the way homes prices are starting to edge up..... The Appraiser is taking this into consideration.

You can appeal the appraisal but with a Bank REO and the way the Homes are flying off the Home Path Web Site with On-Line bidding, you’re better off keeping the appraisal the way it is.
No two appraisals will ever be the same.. Especially Now with the way appraisers are being regulated to prevent any collusion.
Does this make sense to you?

Congrats on your prospective home purchase you bought at the bottom and you in all likley hood giong to see appreciation in the Months to come.
0 votes Thank Flag Link Fri Sep 14, 2012
Hello Golemaw,

Although your points have some merit, I think that they are minor in nature,

A two car driveway is better than one but I have never seen an appraiser make an adjustment for that. Your house is a detached corner unit or a semi detached corner unit. Comparable sales are closer to lower value housing. so all the comps are to the North and West. How far away from your house are they. You need to provide comps that you would use to support the value and give them to your loan officer. I challenge appraisals frequently and you really need a lot of information to support your case. You certainly need more than what you have stated here.

Good Luck.

Regards,
Alan Openshaw
Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010 & 2012
NMLS ID 143960
0 votes Thank Flag Link Fri Sep 14, 2012
These are questions for your loan officer as each company handles appraisal rebuttals differently. If the property is a conventional loan, you may be able to if everything went bad, change lenders and order a new appraisal. If this is a FHA loan, you're stuck with that appraisal and the only thing you can do (also with a conventional) is provide what you feel (or your agent) are better comparable sales than the one the appraiser used. Often times the comps that are used are used because those _are_ the best comps. Appraisers would love to only use comps in built up neighborhoods with two car garages/driveways with corner/cul-de-sac homes but the reality is that's often not the case within a mile of your home (typical radius, will differ depending on population density).

I hope your LO or their manager provides helpful information for you to proceed. If they don't and you're sure you can get a higher appraised value and have sufficient information to support that, you may have to change lenders.

If you need immediate responses, you may email/call me, otherwise, put additional responses here for the benefit of others.

Best of luck to you!
Web Reference: http://RobWeber.com
0 votes Thank Flag Link Thu Sep 13, 2012
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