Possibly not able to sell home due to incompetent appraisal!

Asked by Mommy of 3 boys, Folsom, CA Fri May 1, 2009

We are currently trying to sell our home, not as a REO or short sale, but in order to find something a little bit bigger for our family to grow into. We have an accepted offer and have an additional back up offer at $1,000K less. An incompetent appraiser came in and low balled our home, for $60K less than our selling price, using almost completely bank repos and short sales (which most homes in our area have been within the past 3 months). Our home is only 3 years old, in excellent condition, well upgraded and on a larger than average lot. Even though the lender is still financing the new homes built by the same builder for over $100K more in the same development, they have refused to fund the loan. How can we remedy this??

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Mommy of 3 boys’ answer
Mommy of 3 b…, Both Buyer And Seller, Folsom, CA
Sun Jul 12, 2009
Thanks again to everyone for the great information, clarification and advice. The good news is that after a long and difficult escrow, we were able to finally jump through all of the hurdles in order to sell our home! We were able to get our original contract price and are happy to be moving on. The irony is now there are 4 homes in our neighborhood, ALL listed considerably above the $/sq ft we had to fight to get!! This market is intriguing ;-)
Thanks...
0 votes
, ,
Sun May 10, 2009
Dear mom - I know how frustrating this must be for you, but from my perspective it's both frustrating and quite common place these days as I have been dealing with this on most of the loans I originate. I won't bother you with the myriad of reasons why appraisals have been coming in lower than purchase prices, but I will tell you there's virtually nothing that can be done about this, other than to simply adjust your price to the appraised value. Even if the appraiser was coerced to push the value up to the purchase price, chances are the lender would cut the value anyway...

Appraisers have very rigid guidelines to follow when it comes to evaluating a property, and have no margin for error when their work is reviewed by an underwriter. If this appraiser was incompetent in his evaluation of your property, the U/W would have room to adjust your valuation upward.

Your agent should be able to properly advise you about your options, and I will admit I don't even know that you have room to adjust your price to make this work. But if you don't, you'll pretty much need an all cash buyer so your deal isn't dependent on an appraisal..

best of luck to you!

Jeff Marr
Stanford Mortgage
916-947-1312
0 votes
Anna Boyd, Agent, El Dorado Hills, CA
Sat May 9, 2009
Happy Mother's Day tomorrow!
Darn you wished an appraiser could take into account that you have 2 - not 1 but 2- willing buyers ready to pay the amount you feel it should appraise at based on sales you mention.

Sue is correct that your listing agent should (and probably has been) trying to bring the other comps in to play. She is also correct that lender's seem to be using last 3 months when before it was 6 months.

When I do my marketing reports, I only go back 3 months for sales. It's more relevant in this fluid market. And sometimes it can show home prices inching up instead of down. Particulary in areas like Folsom where the average days on market is under 60 days from list to going pending sale. There's some areas that days on market can be over 100 days. Folsom is hardly a declining market, and something that should show up in an appraisal. Good luck!
Web Reference:  http://www.annaboyd.com
0 votes
Sue Archer R…, Agent, Palm Harbor, FL
Fri May 1, 2009
I assume the appraiser is hired by the buyer and their lender. An appraisal uses comparative properties in the area that have sold in the last 3-6 months (they seem to have narrowed it more to 3 but it used to be 6).

If you are disputing the comps, I would suggest you get a copy of the appraisal, look at the comparative properties that they used, and find more appropriate comps. Then you can argue the value that they calculated for your home. That's the only approach you can use. They MUST use bank owned homes and short sales in this market, and as instructed by lenders to appropriately value your home against others that sold.

You can order your own appraisal and see if they can officially justify the higher price, you can suggest better comps for the original appraisal, but there's are your only options.

this is something that your listing agent should be helping you with? I'm not sure there's another alternative. Some of your amenities, while nice, may not add to the value in the appraisal, unfortunately. Good luck, that sounds like a challenge.
Web Reference:  http://www.suearcher.com
0 votes
Ed Favinger, Agent, Folsom, CA
Fri May 1, 2009
Hey Mom...

I don't know what the appraiser was thinking... maybe you'll get a response on here from someone who is one... but if he had some "comps" that were "more recent"...? then that is why he probably used them...

Have you got some sale information that's not as "stale dated" as the ones you mentioned...? If so that will have more weight in their analysis...

I hope this helps...
0 votes
Mommy of 3 b…, Both Buyer And Seller, Folsom, CA
Fri May 1, 2009
Our model (they recently added 40 sq ft) that sold down the street from us for $100K more than our appraised value in February. Three more that sold down the street for over $120K over our appraised value in November and December. We did submit these tax docs to the appraiser, but he failed to use them in his comps. If he is using the neglected and often times, intentionally damaged, neighborhood foreclosures in his comps, I would think he would also use a new home (that still had less amenities and lot than our home).
Thanks for your feedback!
0 votes
Ed Favinger, Agent, Folsom, CA
Fri May 1, 2009
Hi Mom...

I must have posted my first answer about the same time as your second comment...

Hey to answer your question... why didn't they use those comparable sales...? GOOD QUESTION...

If you are reasonably sure that they have closed within the last 6 months... the more recent the better... then you might get the appraiser to review and maybe agree with you...

Get those addresses.. maybe the sales guy at the Builder's office can help you with the addresses and then your agent can look them up on the "tax roll" to get the "recording" data etc...

Good luck.. I hope this helps...
0 votes
Ed Favinger, Agent, Folsom, CA
Fri May 1, 2009
Hi Mom....

If you are still in a new development.. chances are that the new sales in your development that have closed are not part of the MLS...

What you might want to do is ask your Realtor to get closed sales that are shown on the County of Sacramento tax rolls which he or she have access to... They can search by street name...

See if they can't find some sales within the last 3 or 4 months that might reflect the higher price you are hoping to get...

An appraiser is going to use "comparable sales" on properties like yours and the closer to your property the more weight they will be given in evaluating your home. So hopefully, you can find some sales on the tax rolls that have the same sq footage as your home, which means it's probably the same floor plan or close to it...

If you can find some that have closed on the tax roll.. this might work...

There's always a "storm" in a real estate deal... and this is "your storm" it appears...

I hope this helps...and you can over come this... good luck...

In the mean time.... Make it a great day...
0 votes
Mommy of 3 b…, Both Buyer And Seller, Folsom, CA
Fri May 1, 2009
A few of our model of home was sold by the builder less than 6 months ago for almost $100K more than what our selling price is! Same home, less upgrades, less lot and a block away!! Why aren't those comps used??
0 votes
Cel Durant, Agent, Roseville, CA
Fri May 1, 2009
It is an unfortunate situation for you. The appraiser is supposed to use the most recent comparable sales in the neighborhood. If these sales prices have all been low due to a high number of foreclosures and short sales, it will affect your value as well. The appraiser does have some room to adjust based on mitigating factors - the fact that you have two willing and able buyers who want your property should figure into the equation. The appraisal can also be adjusted for differences in condition, lot size etc. Appraisers have come under fire recently for being unduly influenced by lenders. Your agent needs to talk with the other agent and their lender and see if there is anything they can do. It might or might not be possible. Another appraiser could come up with a different value, but there is no guarantee it will be higher. The buyer cannot get a loan unless the property appraises for the contract sales price. (unless they bring in an extra $60,000)
Good luck.
Web Reference:  http://www.CelYourHome.com
0 votes
Erin, , South Lake Tahoe, CA
Fri May 1, 2009
Hi Mommy of 3 boys: I have seen so much of this lately. It is very unfortunate for you that we are in a declining market, however, Folsom has not seen such a sharp decline. Have your agent look at your appraisal and the homes the appraiser used for comparisons. If you and your agent think the bank's appraiser is out of line, have your buyers see if they can use another lender. I doubt if your buyer's lender will fund the loan or ask for a re-appraisal. As far as the appraiser using bank repos and short sales, if that's what is selling in your neighborhood, that is what they are required to use.

Price adjustment down would be the only other remedy if the appraisers numbers are good. I know this is probably not want you want to hear, but I hope this helps. I can't give you more information without seeing the appraisal, your home, and performing a market analysis. Your listing agent should be your go to person for this.

Good luck.
Web Reference:  http://SoldByErin.net
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