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Hi there. This will be our first time doing this, so any advice is appreciated.
Decided to do a refinance. We've decided that we will not be in this home until the note is paid off, so it is of no real consequence to us to have to start over again.
Got the appraisal back. While I thought that the lending offer's value was overly optimistic, I figured it would at least appraise at about 525k based on what I've studied/know about the neighborhood. The appraisal was off the mark from the lender's value (not a surprise) but it was way off the mark from my more modest expectations as well. It appraised at 424k, which is less than even what we paid four years ago. We refinanced through our bank to a lower rate in 2016 and the home appraised for $475k. At that time, we had only done a fraction of the upgrades to the house. In 2019, we've upgraded quite a bit and the list was extensive. We left said list with the appraiser and he noted that on the report.
A timeline. The home appraised at 435000 when we first purchased in 2015. It could be considered pretty dated. In 2016, we made a few upgrades. It appraised at 475k. Barring a catastrophic real estate event/recession, there is no explainable reason why the value went down so steeply. I've had low appraisals before, but that was in 2008, during the recession. To be so far off just doesn't pass the sniff test. Even the tax appraiser (which is notoriously not on the mark here in central TX) valued the house at around 500k last year. The market peaked in 2017 and then went a bit soft in 2018. There is always an inventory scarcity in this neighborhood, so truly finding comps can be challenging. He found a few low-priced comps and compared them with our property. There's a reason why those comps were lower priced...the owners did some upgrades, but they still could be considered somewhat dated. One comp's square footage was incorrect. If it was accurate, then the price per sq ft would be 150, in line with what I was thinking it'd be. Upgrading matters in our neighborhood when the market has cooled off. People won't pay half a million for 80s brass hardware and 12 x 12 tile floors and golden oak trim everywhere.
He also miscalculated the square footage by 200 sq ft. The home is listed on the tax rolls as 3700 sq ft, the home was marketed as 3700 sq ft, and it was appraised (twice) at 3700 sq ft. this person measured 3484. That's quite a bit of a difference.
The market has started picking up again and he did include some pending sales. One was for a home that was smaller than ours and it was 140 psft.
Two others are over 500k, including a home that is less sq ft and upgraded. I guarantee if we were to put our home on the market today, it would fetch what I think it's worth. Meanwhile, he assessed our home at 120 psft and I can't make out in his report why ours was lower than just about everyone else's.
The appraisal was lacking and showed little, if any, of his professional opinion when it came to valuation. Whereas other appraisers noted in their photos the work that was done, his were all basic photos. As is his right, I'm sure.
As I stated, I've never contested appraisals, even the one that came in lower than anticipated. Normally there's not such a steep fall, unless, as I said there's a recession. The neighborhood was considered stable, established, next to amenities, the house is 30 but was kept well and has an effective age of 20. nothing changed for the worse between the appraisal in 2016 and now. All the markers show at the very least it would be what we paid for in 2015.
My lending offer is going to put together an appeal. He did note that there is a 20% success rate, not particularly encouraging, but I'm not going to be dissuaded. Really, this refinance, while nice, isn't the end of the world. We were ok before and we'll continue our lives after. It's just alarming that the value fell from a steep cliff given that the area has actually increased in value and the home itself is in good condition.
What supporting documentation should I submit? I plan on getting some advice and data from our realtor. I also plan on submitting our appraisal from 2016 as a reference.
I submitted our upgrade list.
I asked if I could have another appraisal done and was told no. Is this true?
The lender should have an appeal process. If you have better comps to support your value the appraiser would have to consider them, doesn't mean he would change his value. As to square footage, just check his measurements. Assessors are notorious for including finished basements into the overall living area which an appraiser never does.
It's called a Reconsideration of Value, and your lender should have collected information from you and your Realtor, and even the Listing agent and submitted the data to the Appraisal Management Company.
Might be worth reminding people here that lenders are forbidden from contacting or discussing reports directly with appraisers, since about 2010.
As long as you can get the loan for the amount you need it should not matter what the appraisal shows. If you have $380 left to pay on the mortgage it only needs to appraise for the value the lender requires to loan you $380, for example. You are not selling, so the amount you retain in equity is a moot point.
It's called a Reconsideration of Value, and your lender should have collected information from you and your Realtor, and even the Listing agent and submitted the data to the Appraisal Management Company.
Might be worth reminding people here that lenders are forbidden from contacting or discussing reports directly with appraisers, since about 2010.
Not directly, but they can forward their request for a ROV through the appraisal management company that they engaged for the appraisal.
Hi there. This will be our first time doing this, so any advice is appreciated.
Decided to do a refinance. We've decided that we will not be in this home until the note is paid off, so it is of no real consequence to us to have to start over again.
Got the appraisal back. While I thought that the lending offer's value was overly optimistic, I figured it would at least appraise at about 525k based on what I've studied/know about the neighborhood. The appraisal was off the mark from the lender's value (not a surprise) but it was way off the mark from my more modest expectations as well. It appraised at 424k, which is less than even what we paid four years ago. We refinanced through our bank to a lower rate in 2016 and the home appraised for $475k. At that time, we had only done a fraction of the upgrades to the house. In 2019, we've upgraded quite a bit and the list was extensive. We left said list with the appraiser and he noted that on the report.
A timeline. The home appraised at 435000 when we first purchased in 2015. It could be considered pretty dated. In 2016, we made a few upgrades. It appraised at 475k. Barring a catastrophic real estate event/recession, there is no explainable reason why the value went down so steeply. I've had low appraisals before, but that was in 2008, during the recession. To be so far off just doesn't pass the sniff test. Even the tax appraiser (which is notoriously not on the mark here in central TX) valued the house at around 500k last year. The market peaked in 2017 and then went a bit soft in 2018. There is always an inventory scarcity in this neighborhood, so truly finding comps can be challenging. He found a few low-priced comps and compared them with our property. There's a reason why those comps were lower priced...the owners did some upgrades, but they still could be considered somewhat dated. One comp's square footage was incorrect. If it was accurate, then the price per sq ft would be 150, in line with what I was thinking it'd be. Upgrading matters in our neighborhood when the market has cooled off. People won't pay half a million for 80s brass hardware and 12 x 12 tile floors and golden oak trim everywhere.
He also miscalculated the square footage by 200 sq ft. The home is listed on the tax rolls as 3700 sq ft, the home was marketed as 3700 sq ft, and it was appraised (twice) at 3700 sq ft. this person measured 3484. That's quite a bit of a difference.
The market has started picking up again and he did include some pending sales. One was for a home that was smaller than ours and it was 140 psft.
Two others are over 500k, including a home that is less sq ft and upgraded. I guarantee if we were to put our home on the market today, it would fetch what I think it's worth. Meanwhile, he assessed our home at 120 psft and I can't make out in his report why ours was lower than just about everyone else's.
The appraisal was lacking and showed little, if any, of his professional opinion when it came to valuation. Whereas other appraisers noted in their photos the work that was done, his were all basic photos. As is his right, I'm sure.
As I stated, I've never contested appraisals, even the one that came in lower than anticipated. Normally there's not such a steep fall, unless, as I said there's a recession. The neighborhood was considered stable, established, next to amenities, the house is 30 but was kept well and has an effective age of 20. nothing changed for the worse between the appraisal in 2016 and now. All the markers show at the very least it would be what we paid for in 2015.
My lending offer is going to put together an appeal. He did note that there is a 20% success rate, not particularly encouraging, but I'm not going to be dissuaded. Really, this refinance, while nice, isn't the end of the world. We were ok before and we'll continue our lives after. It's just alarming that the value fell from a steep cliff given that the area has actually increased in value and the home itself is in good condition.
What supporting documentation should I submit? I plan on getting some advice and data from our realtor. I also plan on submitting our appraisal from 2016 as a reference.
I submitted our upgrade list.
I asked if I could have another appraisal done and was told no. Is this true?
Any other tips? Thanks
1. Don't bother with submitting the 2016 appraisal. A three year old appraisal means nothing. Who knows, maybe it was wrong and was overvalued then. The appraiser will not consider that in any way, don't waste his time.
2. Provide comps that are better than those used in the report, complete with an explanation, i.e. "123 Main St. is closer in GLA to the Subject than Comps 1 and 2 in the report". They must be more similar to the Subject than those used. Price cannot be a determining factor.
3. Do not insult the appraiser. Keep it professional. Review the appraisAL not the appraisER
4. Get over $/SF.
5. Actually read the whole appraisal.
It's possible that due to the time of year, your appraisal is coming in lower. In many areas, peak selling period is March/April through September. And, the winter months slow and prices trend down. It may be that the most recent comps are from the slower period and your appraised value reflects those. You may be able to wait a few months and get a high appraisal simply due to timing.
I am curious where the property is. The area that I live in has taken a substantial hit due to pending tax increases and changes in the tax laws. But most people, unless they are in the market to buy or sell, don't even realize it.
I am curious where the property is. The area that I live in has taken a substantial hit due to pending tax increases and changes in the tax laws. But most people, unless they are in the market to buy or sell, don't even realize it.
The OP openly lists that her location is Round Rock, Texas, so most likely that's where the property is.
And yes, it is probably very different from Glenview, Illinois and the rest of the Northshore Burbs of Chicago where your insanely high property taxes are causing serious problems for sellers as well as those who choose to stay in their homes.
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