Author Topic: Home Appraisal Came In Way Below Market Value - Optoions? Second Opinions  (Read 712 times)

BG2008

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My appraisal for a cash out refi just came back and the value is about 75% of of the fair market value.  Has anyone dealt with this in past?  I know that I can do an appraisal appeal.  Can I pay and get a second opinion and submit it to the bank?   


Gregmal

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I had the same thing happen when doing a refi. There s a couple different things to consider. They base it on items that most people dont weigh consciously. Crap like how many sinks you have, capacity of your septic(probably not something you have to worry about), condition of various amenities, etc.

I might have tried to contest it, however I had a town wide reassessment done the same year, and my assessment for that came in about 10-15% higher than my refi assessment. So I used the refi assessment to get the tax assessment lowered(about $2,000 in annual savings).

BG2008

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In my case, the appraiser uses mostly 3 family buildings as comparisons for 4 family building that I own.  And then he's making an adjustment saying that the additional unit is only worth about $20,000 when incremental annual market rent is potentially that much.  Any appraisers that I can call just to pick their brain on how to contest this?  They claim they are giving me 70% LTV.  But if the appraisal is at 75% of fair market value.  Then the actual LTV of market price is only 50%. Too much equity locked up in the RE. 

Spekulatius

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I had the same thing happen when doing a refi. There s a couple different things to consider. They base it on items that most people dont weigh consciously. Crap like how many sinks you have, capacity of your septic(probably not something you have to worry about), condition of various amenities, etc.

I might have tried to contest it, however I had a town wide reassessment done the same year, and my assessment for that came in about 10-15% higher than my refi assessment. So I used the refi assessment to get the tax assessment lowered(about $2,000 in annual savings).

I did the same thing a while ago. I actually asks my appraiser for a low appraisal and used that to get my taxes lowered. However, I didnít have loan to value issues either.
To be a realist, one has to believe in miracles.

BG2008

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I had the same thing happen when doing a refi. There s a couple different things to consider. They base it on items that most people dont weigh consciously. Crap like how many sinks you have, capacity of your septic(probably not something you have to worry about), condition of various amenities, etc.

I might have tried to contest it, however I had a town wide reassessment done the same year, and my assessment for that came in about 10-15% higher than my refi assessment. So I used the refi assessment to get the tax assessment lowered(about $2,000 in annual savings).

I did the same thing a while ago. I actually asks my appraiser for a low appraisal and used that to get my taxes lowered. However, I didnít have loan to value issues either.

Damn you people who want lower appraisals!!!!

Gregmal

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From what I've heard, is its tough to fight an assessment when it is sponsored by the financial company with which you are currently utilizing for your loan origination. Many have "approved vendors". Additionally, its just not likely going to be accepted if you seek to bring in a third party, with a more favorable assessment, and ask the lender to replace their approved vendor. Even though many of us might be honest in our reasoning, the logic behind them disallowing these types of things makes sense. I know plenty of people who were getting crazy assessments ahead of home equity loans during to boom days... it was a scam. Pay the assessor $100 and pick your homes value.

Which brings me to the only piece of advice I can probably give you...let it settle, and then do some due diligence(maybe have your interns do it lol) and find someone who can give you a decent appraisal and then look for a HELOC with a third party lender.

You are in the city so I'd imagine your RE is a reasonably high % of your net worth/capital as you're young and shits expensive there. While I'm in the sticks as you city people call it, I made what I'd call a mistake of doing the same. I bought my home, which didn't kill me. But then followed up with some investment properties as well. All with large money down. And then I started looking at things and realizing that while I appreciated the magic inherent in a 30 year fixed, that I could reasonably expect to do better having much of this cash at my disposal. I looked at many of my options but quickly found out that any kind of RE based financial transaction will likely be expensive. Even my refi, which saved me 75 basis points, added about $8K to my principal balance. After exploring many different things, I just decided paying 3% at IB was my best option if I needed extra cash.

EDIT: If its that low, maybe look to appeal your taxes as well. Then 6-12 months later get a real appraisal and take out a line of credit. Bang em on both ends..
« Last Edit: August 13, 2019, 07:20:22 PM by Gregmal »

Spekulatius

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You can just go with another lender, depending on how much you sunk into mortgage application. They very likely will have different appraiser hopefully coming up with a better valuation. Appraisals are just a few hundred $, I think.
« Last Edit: August 14, 2019, 03:45:43 AM by Spekulatius »
To be a realist, one has to believe in miracles.

bizaro86

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Most likely options to succeed are to get a different lender or wait 6 months and try again.

I have had success in the past by offering to pay for a 2nd appraisal. The bank picked a second appraiser of their approved list and gave me the loan based on the new (higher) appraisal. I met them at the property and provided comps that I thought were reasonable. Making it easier for them to give me the answer I wanted.

fareastwarriors

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How much are we talking about there? Is FMV like 200k or 1 million?

You might offer to do a 2nd appraisal or just go with another bank/mortgage company and then do redo the process and try your luck...

gfp

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We once had a 'subject to renovations' commercial loan appraisal come back too low.  These appraisals are total guesses based on what they think the property will be worth after it is completely renovated.  The banker had no issue just ordering a new one to get the higher number.  Maybe that's not the norm.  I'm sure we paid the $400-500 again though.

We closed a different refinance yesterday - a 30 year conforming loan (check 30 year rates in the US if you haven't lately - they are really attractive) - where the appraisal came in at what I would estimate is 25% over the market value of the property.  It actually caused the lender to require we purchase additional insurance on the property so it didn't really do us any favors.

We all want the lowest value possible for tax purposes and a fair to high value for banking purposes...  My wife has succeeded in getting our properties assessed at the lowest in the neighborhood for tax purposes.  I think the assessor just doesn't want her showing up in the office again at this point...