Home Appraisal Error

Home Appraisal Error

Rental Property Investor · North Alabama · Member since 2020 · 7 posts · 0 votes

Hello, I'd love to have some advice if anyone can help. My family member purchased their home less than a year ago, and the home was appraised at the time of the purchase. There were a couple thousand sq ft that should have been included on the appraisal, but they were not. The tax assessor noticed the mistake when they came by. The appraiser has already admitted fault, but the home value was never corrected. How can I help advise my family member in which direction to help get their home value corrected on the previous appraisal? Since the appraiser admitted fault, I feel it should be corrected by that appraiser rather than having to pay for an entirely new appraiser.

Currently they are paying the additional taxes as well as PMI. If the home is worth more, then they shouldn't be paying PMI as well. Is there any way to hold the appraiser accountable for this since they have currently been paying increased taxes and PMI?

Thank you so much in advance for any advice.

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
5y

The appraisal has nothing to do with them paying PMI. The LTV of the loan is not based on the appraisal, it is based on the purchase price or the LTV, whichever is lower. In this case, the purchase price would be lower, so the appraisal is a moot point.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y

    Rather than chase the old appraiser who obviously screwed up, I might consider getting a new appraisal (making sure the SF is included this time). Take this new appraisal to the city and explain the situation.

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    The appraisal has nothing to do with them paying PMI. The LTV of the loan is not based on the appraisal, it is based on the purchase price or the LTV, whichever is lower. In this case, the purchase price would be lower, so the appraisal is a moot point.

  • Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Amber Hardy why are they paying higher taxes? More sf means higher assessment which means their taxes should go up not down.  The tax assessor will soon correct their mistake.

  • Rental Property Investor · North Alabama · Member since 2020 · 7 posts · 0 votes
    5y

    @Russell Brazil they are still hoping to have the value changed so they can prove they have more equity in the property than originally thought based off the incorrect appraisal. So if I understand what you're saying correctly, the LTV will not change even if they prove the value increase due to the purchase price being lower? Thank you for helping me understand, I appreciate your time.

  • Lender · Grand Rapids, MI · Member since 2019 · 175 posts · 82 votes
    5y

    @Amber Hardy if they want out of pin they would need to get in touch with lender to value home and go though lenders process. The appraised value from time of purchase would be irrelevant to that process. Worrying about changing that value is a waste of time. As appraisers rarely make that kind of error I would hazard a guess that the sq ft is below grade and included in below grade sq footage on the report.

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