Totally wrong appraisal..DO I HAVE RECOURSE? HELP!

Asked by Justmare, Paulding County, GA Sun May 3, 2009

We just applied to do a refy through HARP . We paid 370,000 and put 70,000 down in August 07. I am in Paulding County Georgia. . I pd 350.00 for an appraisal and she was out last week for about a half hour.

Yesterday the appraisal came back at 257,000! and I blew a cork! We have a custom build home with all the upgrades not your average stick us she used as comps, 3200 Sq Ft on 3 acres with 1900 sg in the basement. Granite, Solid Oak cabinets, HDW floors, crown on every wall inside and OUT, composite decking etc.

My description is wrong .. She marked 1 story, I have 2, marked 1 fireplace, I have 2, marked Public GAS, I have Electric, marked sewer, I have septic, marked fiberglass baths, I have marble, marked pull down stairs to attic and I don't have that. I have Hardiplank siding, she marked framed, She marked Screens/average and I don't have any. She used foreclosures as comps and houses listed for sale at 250,00 and below. I got turned down because of it. Do I have recourse?

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Lorie Gould, Agent, Duluth, GA
Sun May 3, 2009
Justmare, many consumers are finding that there homes cannot be refinanced because their homes value has decreased. If you purchased your home in August of 2007, you literally paid at the top of the market and I can assure you that your value has decreased by at least 20% based on what is happening in the area.

Secondly, upgrades are not itemized in an appraisal. Homes are given value based on condition such as poor, average, above average, and excellent. The more upgrades the higher the level which means the higher the value. But lets talk upgrades. Granite is a standard and no longer considered an upgrade. Hardwoods are a standard and not really considered an upgrade. Crown molding is really considered a standard these days... not quite sure what inside and out means. Composite decking... I guess you are referring to the non-rot decking materials. That would be an upgrade but an upgrade that would help your home sell not necessarily add value on an appraisal.

Hank is 100% accurate as he should be since he is a licensed appraiser. A ranch on a basement is a one story. Finished square footage below grade is not as valuable as square footage above grade. If the basement is unfinished then the added value is not significant. Septic would actually be a negative. You have marble bathtubs? Your home is a framed home with hardi-plank so you may be misunderstanding the appraisal.

When a home has a few acres the land adding value to the bottom line is determined by what can be done with the land. Meaning could it be divided and sold as lots, etc.

Because there are so many foreclosures and other distressed properties the appraiser cannot ignore them as comps. They have to stick with the most recent sold comparables. Just as if you were to sell today these same comparables would affect your market value.

I would take Hank up on his offer to run the numbers for you.

Other than that, you can ask the bank if they could obtain a second appraisal at your expense; however, the underwriters may not take into consideration another appraisal. Get Hank's answer and if Hank feels it would appraise for more than you could always choose another bank to refinance through.

Prices a way below 2007 prices!
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Mike B, , Raritan, NJ
Sun May 3, 2009
I would guess you could pay for a 2nd appraisal. I doubt it will help, however.
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Hank Miller, Agent, Alpharetta, GA
Sun May 3, 2009
Slow down - I've been appraising for 20 years now and while your complaint isn't unique, you have to separate the emotion from the alleged incompetency. There are tons of nitwit appraisers out here but there’s also data – and while you might not like that data, that’s the way it is.

Sounds like might be a few errors but understand that we have specific guidelines to follow. Her marking one story and you saying two might be you having a ranch with a finished basement – that’s a one story (just an example). Fannie Mae stipulates how things are reported and considered, not appraisers. Now, if she was just stupid and lazy – different story.

As for comps, we are required to consider distressed homes as well as “normal” homes; a comp is a comp is a comp. If you’re not a tract home then odds are that there might not be a big pool of comps to choose from – she might not have a choice in what she selected.

I saw you’re in Paulding and bought in 8/07 for 370K; congrats on buying at the top of the market. The bottom has fallen out of your area and that area is still declining. There are beautiful homes in Paulding, West Cobb and North Douglas that I often think will appraise/sell for much more then they eventually do – I say it’s like flying in clouds; we think one thing but we have to trust the data (or instruments in my analogy) to draw the proper conclusions.

There’s a big difference between appraiser incompetence and PO’d appraiser clients. Clearly there are many out there that don’t need to be but understand that appraisers are being completely micromanaged now due the previous years that resulted in this mess. When Bush took the reins off the business everyone went crazy, now it’s time to pay the piper.

I touch on a few of the issues you mention here… , and here

Your house is worth what someone is willing to pay, not what you think or what you paid. That estimate is derived from analysis of it and comparable active and sold homes in the competing area. It’s an estimate, there is no “number” – the market will give you that.

If you want, shoot me an email and I can give you an idea of broad numbers.

Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
Prudential GA Realty
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