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I had my home appraised by 2 different appraisers (2 different loan providers, each ordered them, first one eventually didn't give us the best rate in the end....after the home appraised 5% less than expected violating 80/20 LTV).
On the second provider, went to a credit union for a better rate and on the 2nd appraisal, the home value came in lower than the 1st appraisal by 6%. Is this normal? Both appraisals were conducted by "certified" folks (when asked), and happened within 30days. I noticed appraisal #2 choose comps that were all REOs/Short Sale/ArmLth (ArmLth--what's that?), hence a lower result...while #1 appraiser choose comps that were your average 30yr fixed loans, good quality just like ours. Also, #2 choose homes with sq.ft. varying by +-300sqft while #1 hit the same sqft. (+-20!)
I figured 5% was common between realtors and appraisers, but among certified appraisers I was pretty shocked. I can see a diff of 1-2%, but 6% (which is pretty big in cash value)? Should I contest? I'm already willing to pay down my balance/principle (i.e. concessions?) from the #1 provider's result, but an extra 6% on top, I;m not sure.
Last edited by recharged95; 09-15-2011 at 08:22 PM..
Is this a purchase or a refi? If it's a purchase, you should be talking to the seller who needs to lower their price, or you should walk away from the deal.
If it's a refi, it sounds like the 2nd appraisal is flawed. I'd go back to the credit union with a copy of the first appraisal and ask them to have their appraiser reevaluate. But it does sound like the first appraisal was pretty well done, so to keep that LTV at 80/20, you will need to pony up some additional cash.
I'm sure the appraisers will jump in here, but without looking at the two reports, side by side, there are many things that can account for the differences and each appraisal could very well be 100% supported. And yes, one day's difference in date can account for a significant change in value, even for the same appraiser, let alone two.
If you are that close to an 80%, you may want to shop around and see if you can find someone that offers combo loans. 80/15/5's are just as useful in a refinance, as they are in a purchase to avoid PMI and still capture the low rates.
Remember that appraisals are OPINIONS of value based on the appraisers interpretation of market data. You say 5% is common between realtors and appraisers but a 6% difference in appraisals is "pretty big"??? Not that unusual, really.
thanks guys, we did appeal the 2nd appraisal, it had some minor errors in sq.ft. and improvements, but the biggest difference was within 1 month, appraiser 1 took 4 comps over 6 months, said the area was stable and compared to similar sq.ft. homes that sold under typical 30yr fixed loan scenarios and adjusted the homes prices around 9-10%. That's like us, our home is our home and not an investment property.
The 2nd appraiser took 7 comps, homes sold in the last month, which included 1 REO, 1 short, AND had sq.ft. +-300 sqft compared to ours (his main comps were 1100 and 1700 sqft, ours was 1450, he compared homes with plot sizes of 5000 compared to our 6000, etc..). Also added 2 listings, and adjusted comped home prices around 2%. Said the area was in decline too. Yes, funny how the environment can change within 3 weeks. Honestly, the comps were not good as well as the opinion of the area was more negative than positive. This home is the SoCal-movie studios area so 2% can be a huge difference in the pocket book. We told the bank we will pay X% cash to pay down principle, but it like everyone wants an even bigger cash pie (you offer something, they ask for a lot more)--I mean, I have 800+ credit rating and everyone is treating me like I'm a risk. What a complex environment (sigh).
Well, the appeal showed no change in the end. We even provided the 1st report to contest and he didn't budge. And the loan provider 'stands by its man' as we were told by the credit union.
Last edited by recharged95; 09-26-2011 at 12:04 PM..
he compared homes with plot sizes of 5000 compared to our 6000, etc..).
Size is irrelevant. You can have a half acre lot that is more valuable than a 2 acre lot, depending on the location.
In your case, the objective is "utility".
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