With 203k financing, how do you handle the bank's appraisal after repairs being lower than the 203k WWU and county records?

Asked by Mrs. Reese, Atlanta, GA Sun Mar 11, 2012

Contract price is $37,208, our loan amount after improvements is $99,819 and Bank of America's appraisal after improvements is $60,000. County records show $81,000 and that's not including any improvements to the property. We've gone back to the drawing board to cut some improvements, but something is not right and Bank of America's customer service is sucking right now. Anyone else ever had this problem?

Help the community by answering this question:

+ web reference
Web reference:


Michael Hamm…, Agent, Suwanee, GA
Sun Mar 11, 2012
What do your agent and loan officer say, Mrs. Reese. I am curious as to how this plays out. Good Luck!

Michael Hammond


0 votes
Robert Robbi…, , Atlanta, GA
Sun Mar 11, 2012
Mrs. Reese,
I have another Renovation loan you can look into call HOME STYLE. It will allow you to do up to 50% of the final Renovated VALUE in improvements to the home. However it is still subject to the condition of the home plus improvements = better Comps in your neighborhood.
your situation looks like:
37k plus renovation = improved value of 60k you would be capped at 27k of improvements.

My guess is you are not increasing the Foot Print of the home. If you improve a homes basic structure (say a 3 bed 1 bath home with 1200 sq ft) it is still only worth what other same size homes in the neighborhood are selling for. Since at the end of the day homes are basically sold by an average of $ per/SQ FT price you can only see so much improvement (sometimes not enough to justify the renovations) as your seeing now.

What I find brings the most $$ value to a home is adding Square Footage. Just renovating the interior of the home as is limits you to being compared to homes of your square footage and # of beds and baths.
But if you add 400Sq ft (average build out enough for new Master bedroom and bath to be added) you'll find the homes you can now be compared to have drastically improved in comparable value.

Go to Trulia place in your interested street name and then type in a search for home prices with both 1 additional Bed Room and Bath. when you search you will see the home prices have jumped significantly.
Earlier example was if you had a 3/1 with 1200 sqft now you add 400 sqft with additional Bed and Bath
now you are comparing a 4/2 with 1600 sqft.

Most of the time when I show customers this, they see those comparable have jumped up very significantly.

Recent example, I took a 3 bed 1 bath home in Peoples town that was selling for 30k and showed how with at least the addition of at least 1 bath the lowest sale on the same street jumped to 135k and with the addition of All of the recommended items (the Bed, Bath and the 400Sqft) (now improved to a 4/2 1600sqft) the home comparables (sales on the same street and with3-6 months) jumped to 200k and above.

So retake a look at what you are doing, ask your Real Estate Agent to find out what sales are to be expected in the next larger homes in the neighborhood. Either do some more research or walk away from an area that is not going to reward you with an increase in value.

I present financial options in an Investor Class several times a Month (along with a panel of Contractors, Attorneys and Insurance personnel) to show buyers and home owners how to get the best out of there home renovation options. Call me and I can show you some examples of what you may be able to do and possibly get you with a different contractor proven to show you how to get more value out of your home.

I hope that this information has been helpful. I you should need anything please don't hesitate to call.
Best Wishes,

Rob Robbins
Senior Mortgage Consultant
Cornerstone Mortgage Group
6151 Powers Ferry Road NW
Suite 610 Atlanta GA 30339
Office 678-578-7613
Cell 404-932-5353
1 vote
, ,
Sun Mar 11, 2012
County tax assessed values have absolutely no bearing on a mortgage appraisal. An appraisal ordered by a mortgage company looks at comps within the last 12 months. Those within the last 90 -180 days are given the highest priority.

203K loans can be challenging. It is quite possible that some of the renovations being done are not value added. To support that loan amount, you probably needed an "Subject To" vlaue of around $95,000. For 203K's, HUD uses 110% of the appraised value.

I think you can google Bank of America and 203k and find that you are not alone. Unless you change lenders, you just have to work through your current loan officer on a resolution.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle Renovation | VA | USDA | GA Dream | Jumbo Financing
Web Reference:  http://www.rodneymason.com
1 vote
davidwbrower, , Woodstock, GA
Sun Mar 11, 2012
I have had nothing but bad experiences with BofA. Size breeds incompetency and lack of customer service. I would use a different lender.
0 votes
Mrs. Reese, Home Owner, Atlanta, GA
Sun Mar 11, 2012
Imarked best answer on the wrong post, but thank you all for you feedback. My agent has done over 50 of these transactions and I think this one by far is the most interesting. I was very surprised with Bank of America; to be so large, they are so disconnected with one another as it relates to communication.
0 votes
, ,
Sun Mar 11, 2012
The tax assessment doesn’t factor in the transaction. I assume this is a proposed 203k and not one that is under way. The lender does the after repairs appraisal before the loan is closed. If the appraisal says the house is worth less than the anticipated loan it will not close. If there is a $30,000 gap you can’t make the improvements.

As for how to handle the appraisal, you can always challenge it, but you must be able to prove it is wrong. You will need very recent comparable sales located very close to the subject property.
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more