Under appraised! What the heck?

I personally I not done that. I read/study a lot on here and others are now running into this problem. Some appraisers got stung at the market peak and are covering themselves going the other way. So what I witnessed here is people are trying to get a different appraiser and appraisal. Plus having the appraisal sent to them if they can. Or at least be forewarned.

Barbra you should hire your own independent appraiser one that is not representing the lender. Show him everything you have done to add value,that way you have something to show the lenders on your behalf.

This is were you need to check and find out what the true comps are in the area. and in a lot of states you can not pick your on appraisal. and when you are referring about the county tax records I have seen then as much as 50k to high. So please don't use them. True comps in the last 90 days will get real close.

Randy

Thank Jim,
I'll check it out.

Thank you Randy,

I'll go back over this again.
Barbara

I and the lender are currently contesting it, which you have every right to do. You know the area better than an appraiser will. Gather comps in the last 3 months w/in 1 mile of the property, trying to stay in the same neighborhood if possible; only going out if its a comp that is within 1 mile and shows the value is in the home. Stay within 500 square feet and as close to your size/beds and baths as you can. Show their values not only as their closed prices, but their price per square feet as well. Make a good case for value, area and differentiating factors between one neighborhood and another in the city your property is in.

For mine, one recently closed that was smaller than mine, for $55K more than the appraised value came in on my home. My home is a track home as well, and it just so happens that on Aug 31st, the EXACT model, in the SAME tract (which is in the BEST part of this particular city), same amenities and size, sold for $50K more than the appraiser appraised the value at. (At the time of the appraisal, this comp was only 4 months old.) If his appraisal was correct, it means my property lost more than 25% of its value within 4 months, and that just isn't the case at all. The one that happened to recently closed is in a different part of the same city, but within the limits the appraiser used. It is in the WORST part of town and sold for $5K more than the comp that was the identical to my home that sold on Aug 31st. (There are only 3 comps in my tract in the last 2 years, and luckily one of them is the exact same model and fairly recently). It has been in discussions for 4 weeks now. BUT, you do have recourse. This is only one person's opinion and if you can show proof of value as much as possible, you can combat it. I wish you luck, it ISN'T a fun process! AND we're out the money if they don't get the accurate appraisal.

Banks are not allowed to choose appraisers that know the areas (They can't even be involved in the appraisal process, an independent appraisal selection committee or something or other chooses the appraisers), so they send out an appraiser that may know nothing about an area, and it really puts a hamper in the whole appraisal process. The good news is though that 2 of my appraissals did appraise for or better than I predicted, so its not ALL bad news. My rehab that I bought in Dec '10 came in $15K higher than the ARV appraisal done at the time I originally bought the home in December 2010.

are not accurate; they don't get updated either, unless there is activity with the property.
As the others have suggested, the best way to estimate the value of your property is to get prices of 3 to 9 sold propeties in the last 90 days, similar to yours in size, #of BR/BA, age of house, and within 1 mile of distance.

wishing you success,

valerie

Valerie hit it on the head also. Town, county or city tax appraisals do not move unless there has been some buy sell activity on the prop. I just went thru this with a SF that we put about 4k worth of upgrades in. On the cosmetic side we made changes that stand right out, big difference. But the appraiser came back with an estimate of 5k less than we needed. Of course I had words for the appraiser, which probably didn't help...Jan

in these situations (nod to Jan) is to be articulate and reasonable at the same time (deep bow to Tammy). Get your proofs together. Formulate and articulate an argument based on your proofs. Take all of this to your mortgage broker and lay it out for him/her. A good mortgage broker will advocate your position to the underwriter in writing and in dialogue with your lender. A great mortgage broker will do both of these directly with the loan underwriter assigned to your loan application.

Good Luck.

I found a new Realtor. She took a look at my appraisal and found it to be very fair, and looked at comps and found the same thing. I think the problem I ran into on this one was using a very green RE agent that ran comps for me originally. She perhaps didn't know that the appraisal had to comp with other rentals. Not other residentials. That's how it works here I guess. If I contest this it could come in less. If it came back more it wouldn't be by much. I think I'm going to have to eat this one. I didn't loose, I just didn't get to pull all my cash back out.

Ohyee, what a learning curve...

Thank you for your post. It was very informational. I wish you luck on your contesting of the appraisal.

Barbara

Sorry your appraisal didn't come back where you were wanting it. I found my problem to be from using a very green RE agent. She comped to residential not other rentals. I guess that's how they do it here. Needless to say I have a new Realtor now. Expiernced and an investor. Thanks Jan for your post

Barb

Your post was very informational. I love this community of Investors. If you read above this post you'll find my problem was a very green agent. She comped using residential instead of rentals. That's how they're doing it here. Rental to Rental. My new Realtor found my appraisal very fair. I'm learning...

Thanks again.
Barbara