My house was recently appraised for refinancing since but

Asked by Jj, Los Angeles, CA Tue Jun 3, 2008

My house was recently appraised for refinancing since but the appraiser compared it with the properties that were foreclosed - so the property value went down significantly now I cannot get a high LTV to get money out to use it to buy another property. Is that right that the appraiser should compare it with properties that are foreclosed in our area? The lot size is not even the same with our house.

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Frank Diaz, Agent, Honolulu, HI
Wed Jun 4, 2008
Jeffrey is exactly right.

On the appraisal itself, it should show that your land value was taken into account. There should be an actual figure there showing that your value was increased by $xx,xxx.00 due to XXX additional SF of land.

Compare that to the other two or three properties the appraiser used. The appraiser is not "The Bad Guy." If there is some way to bring in the value, they will be happy to show it, if it can be documented. If the appraiser has incorrect or missing information, let the lender know. Any other recent sales, the assessed value, improvements you have done, location (corner lot, view), etc. will be helpful.

You may need to wait a month or two as well. I have a listing now that had no good comparable sales. The most recent one was a foreclosure for more than 10% less! Last week a very similar unit sold within 3% of our price. That makes our price look just perfect or very close to what it should be.
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Jeffrey Schn…, Agent, Austin, TX
Tue Jun 3, 2008

An appraiser is tasked with using "like" properties. If your general area has a high number of foreclosures, then the market considers foreclosures as like properties. Note that some lenders are pushing appraisers to be more conservative (exactly the opposite of what they wanted just 12-18 months ago), so there could be a general push for the lower end of your market. The only way to know if there was a mistake is to have access to an agent who could pull comparable data for you. If the comparable data shows that foreclosures are not prominent, then you may have a debate on your hands with the appraiser.

While the lender is the client of the appraiser, ask the lender that did the appraisal if you can talk to the appraiser to understand their findings. But don't get into an argument with the appraiser, that won't be beneficial. Just ask straightforward questions, and listen to the answers. Then if you can get comparable data that shows the appraiser should have considered different data, then you might present that in a second call to the appraiser and ask them why they didn't consider some of the comparable information that you've discovered.

Best of luck,

1 vote
, ,
Mon Jul 20, 2009
Appraisers should use comps that are in your neighborhood.
I think he is doing the right thing, thats why the real estate market is low, think about it.
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Marc Wizman @…, , Beverly Hills, CA
Wed Jun 4, 2008
This is a different market. Strict lender and appraiser requirements will be the norm for the next few years.
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George, , 92648
Wed Jun 4, 2008
Kudos Jeffrey and Frank! As an Appraiser, I look to see what's driving the market. If there are a lot of foreclosures or "short sales" in the area, they are most likely determining market value. I usually like to use both arm's length sales and distressed sales in a report to show the bank what the difference is on the open market. In the past, you were right that it was not typical to use foreclosures in a report. But now that there are so many in certain areas, they have to be considered.
Take care, George
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