going thru divorce in colorado. wife is trying to refi to take over mortgage. appraisal came in lower to comps in area.

Asked by P, Windsor, Denver, CO Tue Apr 19, 2011

appraiser says he is projecting a reduction in value in the future and building that into the appraisal. is that legal?

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14
Matt Pickett, Agent, Colorado Springs, CO
Tue Apr 19, 2011
You can wait 90 days and order another appraisal
1 vote
Mike Callis, Agent, Aurora, CO
Tue Apr 19, 2011
This is not a question of legality; it is a question of appropriated appraisal practice. The appraiser’s job is to determine the property’s value as of a specific point in time. The appraisal report may indicate declining values, but appraiser should not negatively adjust the sales unless he can prove the amount of decline is accurate and prove that it will continue; the same goes for appreciating values. That proof should be included within the report itself. My experience indicates that values in the metro Denver are flat – neither declining nor appreciating. Most likely, any differences in value from one property to another, at this point in time, is a result of differing attributes of each property and not the time period in which they sold. However, if the lender specificity asked the appraiser to forecast if the property would decline in value in the future he will have to comply; but, his forecast should be based on facts and not conjecture, and not just based on economic forecasts, rather it should be proven in the market. If it can’t be proven in the market then the adjustment should not be made. Question the appraisal with the lender, ask for a copy and see how the adjustment was proven, ask for an appraisal review by an independent review appraiser, then you can decide an adequate course of action. I hope this is of some help. Feel free to call me, Mike Callis 303-563-9143 or email me at, firstrealtyofamerica@gmail.com.
1 vote
Wendy Glazer, Agent, Denver, CO
Tue Apr 19, 2011
I am sorry that you have to deal with all this and I am sure it is a difficult situation. I would suggest getting a 2nd appraisal. Good luck.
1 vote
Suz A, Agent, Longmont, CO
Tue May 10, 2011
Here are some guidelines, if you think you want to challenge the appraisal:

http://www.oneprojectcloser.com/how-to-challenge-appeal-home…

http://www.marketwatch.com/story/how-to-fight-back-against-a…

Hope that helps.

Best,
Suz
PML of Longmont
Web Reference:  http://www.suzrealestate.com
0 votes
Tim Page, , 99037
Tue May 3, 2011
Surely, you'll have to hire your own appraiser to determine the value of your home. It sounds like financial stress is causing lots of these types of things. I just got a call about a divorce today. Here's what you can do.

1. sell your home and spit any money from the proceeds.

2. Refinance your home and decide who will get the money and who will get the home.

I recommend that both spouses hire their own appraiser. The bank will require their own appraisal, too, before they'll give you any money. Any strange stuff on the appraisal will be disclosed if you do it this way. Look at the effective date of the appraisal and see if it was the day he/she appraised the home or if their is a different date. The appraisal must have sales that bracket the sales price for both the adjusted sales (sales at the bottom of the appraisal) and the unadjusted sales (what the homes sold for). This prevents this type of stuff.
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Apr 19, 2011
Undetermined what you truly mean by "legal" for an appraiser make their comment(s)

If the property is undervalued vs mortgage then lender would not approve refi

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes
Dp2, , Virginia
Tue Apr 19, 2011
I won't address the legality issue, but I will address the projection issue. Good appraisers (especially on commercial deals) price the market trending (or price projections) into their valuations. Mike stated, "The appraiser’s job is to determine the property’s value as of a specific point in time." Keep in mind that unless your property sells on the day of the appraisal, then its valuation will change over time. Since a properly priced property often will sell within the DOM of that market, a good appraisal should project what the market value of the property will be at THAT specific point in time.
0 votes
Phillip Papp…, , Denver County, CO
Tue Apr 19, 2011
It is legal for the appraiser to build the declining market into the value of your appraisal. You may have some other options though. It is hard to know without speaking further. Feel free to contact me if you would like to discuss this in detail. ppappas@megastarfinancial.com. 303-321-8800 ext. 770.
0 votes
Chris Yedo, Agent, Aurora, CO
Tue Apr 19, 2011
For your wife to take over the mortgage, I would suggest doing a qualifying assumption. This would not give any cash out, but it would take your name off of the mortgage. Many mortgage companies offer this, and it can be very inexpensive, much less than a refinance. Your wife would have to prove she can qualify for the mortgage payments, and then your name is removed from the mortgage and all the other terms stay the same.
0 votes
stephen holb…, Agent, denver, CO
Tue Apr 19, 2011
Suggest you make sure the appraiser didn't use distressed sales as comps. If it was for the bank, more than likely they did. Distressed sales have nothing to do with the market value of a property (unless they are the dominate type of transaction within the market area), but lenders and some unscrupulous brokers will instruct an appraiser to use them. A terrible disservice to the public. If you find that distressed sales were used, demand a 2nd appraisal using only arms length, market based transactions. Probably wouldn't hurt to have your lawyers back you up on this.
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Tue Apr 19, 2011
Refi appraisals often seem like they have a much wider margin of error or wider fluctuation than when purchasing a house. I am not sure why that is, but I have noticed it over the years. I am not sure how an appraisal can take into account the future of anything, it is suppose to be a snapshot of value as of that day based on construction costs or comparable sales. Maybe that appraiser has a working crystal ball, mine stopped working as soon as it went out of warranty.
0 votes
MODUS Real E…, Agent, Denver, CO
Tue Apr 19, 2011
He is saying that your property is in a declining market. You can find his stats to back this up in the market conditions addendum within your appraisal. What is the loan to value and cumulative loan to value based off the appraised value?
0 votes
Juanita Chac…, , Denver, CO
Tue Apr 19, 2011
If it is FHA you could do a qualifying assumption
0 votes
Emily Hayduk, Agent, Denver, CO
Tue Apr 19, 2011
I am not sure about the legalities, but you may request and pay for a second appraisal.
0 votes
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