What happened with my appraisal??

Question

Apologies if this question has been answered already. If so, please redirect me.

This is our second live-in flip in the last few years. This time we purchased a ranch on a cul-de-sac which needed a lot of updating and in a desirable school district. We bought it for 170K and put about 20K into it over about 3 yrs. We thought the ARV would put us at 250-260K all things considered. About a year ago a ranch nearby sold for 245K which helped inform our ARV estimate. This week we refinanced, it appraised for 214K. Much lower than we anticipated. Has this happened to anyone else?? Where do we go from here? I have read that we can appeal it but that doesn't seem promising. Help please!

Mindy Jensen · Answer

@Ryan Slicer , first off, read through the appraisal report carefully. Are they appraising a 3 bedroom when your property has 4? Did they appraise a home with 1700 Sq Ft when your actual property is 2400?

Make sure the home on their paper matches the home you're in. Appraisers are human, too and make mistakes.

Did any recently sold homes sell for a discount for reasons perhaps not apparent to the appraiser? My own street has 2 houses that sold for significantly lower than they would have normally. One had a $30,000 sewer repair built into the cost, and the other one had a non-disclosed, dead body-discovered-after-12-days-in-August discount to the tune of $75,000.

Can you get any other information about the houses that have sold recently? If they are all granite/natural stone/stainless steel while yours is laminate counters, laminate floor and avocado appliances, the other house is going to be worth more.

You can fight your appraisal. You've got the best chance at a second look if there is a mistake.

Nicholas Covington · Answer

Hello @Ryan Slicer

The good 'ol appraisal conundrum. To start with, sure you can request a second appraisal if you want to pay for it, maybe request someone local to area and ask your realtor to offer up some other comps that they might be able to take into account. Your agent will/should know where to draw the line between what they can and can not do with the appraiser.

Problem is I am not 100% certain which one they are required to use, so the next one could come in LOWER and you will be stuck with that one instead. It happens.

Most comps used are between 3-12 months, you stating "about a year ago" kind of pushes that one away of it being used to justify your wanted value. Plus you will would have to really know that that ranch was something comparable with yours, not just about the style of home. The appraiser though could have not used this sale since it is kind of old, but could be possibly used if brought to the attention. I would like to assume that they saw it and treated it with little merit.

A lot can happen in a year though so maybe that home wouldn't be priced that high now. TONS of factors. Reading this I would say it kind of is what it is and luckily you are still coming out with a gain.

Good luck,

Nick