How To Challenge An Appraisal?
Hey Bigger Pockets Fam,
Question: How Do I properly challenge an appraisal?
Problem: I have a unique situation with my first purchase, have a Triplex under contract in AZ that's 7-Total Bedrooms and I'm using an FHA Loan hoping to put 3.5% down. The appraiser is using comp Triplexes which are all 4 to 6-Total Bedrooms in the area, there are no 7-Total Bedrooms Triplexes in a 5-mile radius he can use as a comp.
The issue here, my mortgage payment would be ~$2,700/mo at 3.5%. According to FHA Loan requirements 75% of my appraised rent rolls must be greater than the mortgage, the appraised rent rolls were initially at $3,100/mo which would fall short of the requirement. He stated that since none of the 13 Comp properties had rent rolls over $3,100 that was the highest he could go, again none of the comps he used are 7-Total Bedroom Triplexes. This would fall below the threshold for the 3.5% FHA Loan requirements and my lender then called to say I'd have to put 20% down instead, making my down payment jump from 20K to 120K. The rent rolls have to be $3,700/mo in order for me to put 3.5% down.
Last night I sent an email challenging the appraisal, in the letter I pointed out that none of the comps were 7BR+ therefore the rent rolls of 4-6BR triplexes would be 15%-35% less in rent rolls per month. I produced the existing leases for the Triplex I have under contract which show $3350 in rent/mo (leases were in place Oct 2018) and are below market value, I pulled comps from Rentometer showing within a 1.1mi radius for a 3BR single family + 2 2BR Duplexes the rent rolls would be ~$3,700.
Today the appraiser adjusted the rent rolls to $3,300 but I would still have to put ~11% down. In the appraisal, he once again cited the 2 Triplexes nearby with 6-Total Bedrooms as rental comps and said he can't go above $3,300 since there are no 7BR comps in the area.
What recourse do I have here? I'm trying to challenge an appraisal that has no nearby comps?! Plus, the appraiser just went on vacation to Ireland today and I'm trying to close next Tuesday! Help!
Thanks in advance,
George
PS Listened to Bigger Pockets Podcast #314 with Andresa Guidelli and tried using some of her tips regarding challenging appraisals, this is my first time buying/challenging an appraisal so could use any advice to aid in this process :)