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i'm refinancing my mortgage and the appraisal has come back significantly less than expected and my ltv is 90%, which means i'm paying mi (i'd rather avoid this!).
i've been talking to two banks about the refinance and had chosen the one to go with, hence the appraisal. now the second bank is suggesting i pay for their appraisal in the hope that their appraiser will find more value. "for $385, you might as well roll the dice, you could save yourself a lot of money." to be fair he has found some comps that appear to suggest the first appraisal might have been a bit conservative.
does anyone have any thoughts or comments? my initial reaction is that it's a waste of money. can there be material differences between two appraisers?
There can be a difference since an appraisal is an opinion of market value. But probably not enough of a difference to get to that 80% LTV that you will probably need to avoid PMI. So, probably a waste of money but MAYBE not.
There can be a difference since an appraisal is an opinion of market value. But probably not enough of a difference to get to that 80% LTV that you will probably need to avoid PMI. So, probably a waste of money but MAYBE not.
Why don't you see if you can contest the appraisal first? Some appraisers are open to listening to reason if you provide facts to them that change their outlook. Of course, some appraisers will get a God complex too and won't listen to a thing anyone has to say, even if their appraisal is horribly inaccurate.
We refinanced our mortgage last summer. The appraisal came back ridiculously low even for this market. I wrote a letter to our mortgage broker (whom is a great guy by the way) including detailed comments on every mistake she made (she said we had a metal roof, we don't; she said several things that were just plain wrong) on her boilerplate template "report". It was not only sloppy it was in error. She used ONLY REOs and SSs as her comps - no regular sales of which there were plenty. We patently rejected the Appraisal and demanded another one. Our broker ended up getting us another lender who did not even require an appraisal on a refi of an owner occupied home. AND we didn't pay for the first appraisal either.
Yes, you can certainly reject and contest this appraisal but you need a realtor or someone with a lot of knowledge and access to MLS to write the letter for you.
Cant pick and choose comps.
The First Appraiser used those comps for a reason.
The Second appraiser will probably find and use the same comps.
Comps need to be near the subject property in location and time.
A good appraisal will use local, recent, comps that bracket the subject property in size and condition.
appraisals can generally vary by 1 or 2 percent and still be considered valid.
you wont get a 10% difference.
Appraisers can now be held liable.
Cant pick and choose comps.
The First Appraiser used those comps for a reason.
The Second appraiser will probably find and use the same comps.
Comps need to be near the subject property in location and time.
A good appraisal will use local, recent, comps that bracket the subject property in size and condition.
appraisals can generally vary by 1 or 2 percent and still be considered valid.
you wont get a 10% difference.
Appraisers can now be held liable.
The most important criteria for comps is proximity to the subject property, Similarity to the subject property, and recently sold.
Bracketing is one additional indication that an appraiser picked good representative comps.
Underwriters like to see it.
Shows the appraiser didn't cherry pick from the available comps.
By Bracketing I mean that if possible, within the comps that meet the above criteria of proximity, similarity, and time, there would be one sold comp of lower price, one sold comp of comparable price and one sold comp of higher price.
Makes underwriters feel all warm and fuzzy.
And to get back to my main point.
The appraiser picked the comps for a reason.
Proximity, similarity, and time.
Which means that any other appraiser is going to be using these same comps.
And allowing for the subjective nature of an appraisal the most you can expect is plus or minus 1% or 2%.
I know because we just went through a transaction where the appraisal came in low.
Last edited by tigger37708; 04-08-2011 at 10:05 AM..
Get one or two Realtors to do a broker's price opinion. They usually know values better than appraisers and they will do it for free. If they come up with the same number, show the new appraiser the realtors work.
Remember, Appraisers do a report according to Fannie Mae guidelines. You remember Fannie Mae? The big company that destroyed the housing market and is now bankrupt.
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