Home Selling in 93703>Question Details

Tanner, Home Seller in Fresno, CA

What can you do if you beleive your appraisal was crooked and appraiser refuses to re examine?

Asked by Tanner, Fresno, CA Sat Aug 20, 2011

I recently had an apprasial for an FHA loan. Though there were traditional sold properties in the area more comparable to mine and sold closer to my asking price he chose to go back as far a 6 months to use 1 foreclosure, 2 short sales, 2 THAT WAS NOT EVEN SOLD and 2 others that were not comparable. They ranged from 307 sq. ft. lower to 364 sq. ft. higher (the higher really hurt and there were 3 of them). Though he was told the garage was not a conversion and was permitted as refinished and garage door still in tact, he chose to list it as a conversion docking me $2000. yet he did not allow for any addtional sq. ft. He treated it as though it did not exist. I have a lge custom pool and spa only 1 property had very small one. He allowed $12,500. on 4 of the properties and $2,500. on the other two. He was very inconsistant with the $ amounts of the comps and just manuplidated the figures to come out where he wanted to be. My agent says I need to wait 3 mo to get a better one.

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I assume you mean the buyer of your home was using FHA financing and their appraisal came back with these discrepancies. If the appraisal was ordered through an appraisal management company (which most often are), then the loan officer can gather up the evidence from the parties (you should send the information to your agent, who in turn will package it up and sent it to the loan officer, it should include a clear bullet point list of all material facts that are incorrect with the appraisal, and MLS printouts of all "better" comps that you would like to have considered)... every appraisal management company I know of has an appeal process.

Now the other way an appraiser can be picked is if the lender has a roster of FHA approved appraisers that it selects entirely at random, and then in that situation the lender itself should have an internal review and appeal process similar to what I just described above. In my experience lender's want to make sure they have an accurate as appraisal as possible, and appraiser's and appraisal management company's get a little embarrassed when a finished product leaves their hands that had room for improvement, which can explain why there is a bit of animosity in these situations.

Now if it doesn't work out with this lender, the buyer can go to a new one but the appraisal does stick to the property for 120 days (details of that are in the 2nd link below). Now if the new lender reviews it and sees some obvious material deficiencies, they can go out and get a new appraisal (details of that are in the 3rd link below).

Here is the HUD mortgagee letter regarding appraiser independence requirements for FHA loans, adding insight/background on why appraisal management companies or a "round robin" way of selecting FHA appraisers is done today: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/fi…

Here is the HUD mortgagee letter regarding appraisal validity periods for FHA loans (120 days): http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/fi…

Here is the HUD mortgagee letter regarding appraisal portability, including when a new appraisal can be ordered: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/fi…

Shane Milne | Loan Officer in Orange County, CA | NMLS #81195
Direct local #'s: 949-273-4161 or 646-257-4842
Lending in all 50 states, all types of mortgages
1 vote Thank Flag Link Sat Aug 20, 2011
How an Appraisal is made:
Visualize a series of COLUMNS, probably 4 or 5;
The First Column is the SUBJECT HOUSE and the others are COMP's.
Down the page we list FEATURES or FACTORS; such as # Bedrooms, # Baths, House Sqft, Lot Sqft, Fireplace, Pool, Roof, Garage, Fencing. Got it?
Now, in each box created, there will be a VALUE: Lets say the subject house is 915 sqft it would get --- or 0. And the first Comp house has 2500 sqft, it might get -100,000; which means that the house is WORTH $100,000 more because of the square-footage. (It is a negative number because the Selling price of that Comp house was approximately $100,000 more BECAUSE of the square footage and we have to deduct that $100,000 to bring them to equity.) Got it?

Now, lets say that the Subject house has $5,000 worth of new fencing and the Comp house has 25 year old OK fencing.: Then the SUBJECT house would get +5,000 and the Comp. house would get --- or 0.

When you go down the page, and enter everything, you get total Comparative Values on the two houses, which allows for the DIFFERENCES.

The two houses DO NOT have to be literally COMPARABLE, they MAKE then comparable with the VALUES.

So the house next door is larger, so what? They made up for that with the values.

Now, if you understand what I just did, then you will understand why;
1.) Two Appraisals can come so close together, and,
2.) Why the Bank will not listen to you about the results.

and in fact I will give you a third;

3.) If you hire your own Appraiser, he will end up with about the same numbers!

Also, please do not compare/equate the ASSESSMENT with the APPRAISAL: The ASSESSMENT is based on the LAST SELLING PRICE OF THE PROPERTY which might be last year. five years ago, or thirty years ago.

I hope I've helped.

Good luck and may God bless
2 votes Thank Flag Link Sat Aug 20, 2011
Tanner,

Over the last two years we have had a number of deals that had issues on appraisal, but in every instance it was appraiser stupidity caused by being out of area and not understanding our market when choosing comps.
In each case we wrote a rebuttal to the appraisal and the lenders agreed to have a second appraisal. Your agent should be able to help you with this.
1 vote Thank Flag Link Sat Aug 20, 2011
Usually, an appraiser that has knowledge and experience in appraising the type of property you own in your market area will do a really good job. Check to see how experienced the appraiser is in appraising your type of property and also if he has knowledge of the Fresno market. If those two prevail, then your best bet is to accept this appraisal and move forward with your closing or escrow or wait the 120 days to get another appraisal. If you are considering to contest your present appraisal, then you'll need to be ready to present your facts, including the necessary and appropriate public and private data sources. Good Luck!
0 votes Thank Flag Link Sat Aug 20, 2011
You can usually get a second appraisal, even on a FHA Loan, if you are willling to pay for it. I assume the appraisal came in below the Contract price and you were asked to lower your price. Hav eyour agent talk to the Buyer's Loan Officer- or the loan Officer's manager. Mistake get made, but it's more likely that the Appraiser took the easy way out, and didn't want to do the deeper research and justification required to submit data that was outside the normal criteria.

My first opinion though, would have you try to visit the homes that were used as Comparables to see for yourself how they compared to your home. If you still believe your home is Superior but wasn't rated as such by the Appraiser, then by all means try for a new appraisal. Good Luck!

Rich Weaver
London Properties
559/916-1442
0 votes Thank Flag Link Sat Aug 20, 2011
Do what a Judge did in New York who got screwed by an appraiser. Sue him.

Appraisal fraud is actually up 50% since the implementation fo something called HVCC, which was a license for banks to make money from the appraisals, raise the price of them to the consumers and get the cheapest appraiser they can find (Not all companies do this, but the practice is rampant).

Take them to a local court and make them prove that they did their job. Enjoin the buyer, the real estate agents and anyone else connected with the transaction who lost money because of this.

Additionally, name the company he works for, the company that assigned the appraisal and the bank that the buyer was going through.

You should get the court date within a month or the lender will take care of getting the appraisal done right.

You can also report him to the appraisal board in Sacramento and even the state AG office. Neither one of these agencies likes fraud.

This is the only way to stop this nonsense.

I am happy to help and tell you more if you need more information.

Best of luck,

Fred Glick
415-683-6950
fred@fredglick.com
Web Reference: http://fredglick.com
0 votes Thank Flag Link Sat Aug 20, 2011
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