Appraiser can't appraise, now what???

Question

I am buying a unique for sale by owner property. It was originally a church connected by a semi-underground tunnel to the rectory. It was then remodeled into a 3 story single family home connected by the tunnel to a duplex. All three units are being run on AirBnB. I am trying to get a residential loan and also use it as a primary residence as a house-hack.

However, the bank told me yesterday that the week-long delay on the appraisal report is because, "the appraiser says cannot complete report because of no comparable sales. Awaiting response from [my] department on next steps." How do I proceed now? I paid almost $700 for an appraisal and I'm not sure how to address this.

Thank you

Patricia Steiner · Answer

You won't get your money back as another contributor suggested. The appraiser walked the property, right? He looked for comparable sales but it's not a comparable property so he is struggling on how to evaluate it.  But it can be appraised, it can be valued.  Unique properties are found in every market. Your lender needs to reach out to the appraiser's company and ask a manager there to become involved.  Again, it can be appraised.  Again, unique properties are everywhere (yours sounds downright cool!). And, your lender needs to make this happen. The appraiser doesn't have the right to hold the deal hostage.  Push resolution with your lender.

Charlie MacPherson · Answer

@Tara Menk The basic layout of the buildings should have been obvious from a simple drive-by or a glance at the property card.  If the appraiser had completed one of those two basic steps, he should have known that it was beyond his capability.

Given that, I would push for one of two things - a full refund or another appraiser without additional cost.  My position would be that you paid for an appraisal and didn't get one.  It's that simple.  The appraiser's inability to complete his job isn't your fault.

Comps are only one of the methods available to come up with a valuation.  The other two methods (more commonly used in commercial appraisals) are the income method (how much income can the property produce) and the replacement method (what it would cost to replace the buildings as they now stand).

My bet is that the replacement method will be a better match.  My second bet is that the replacement method will come up with a much higher valuation.

Good luck!

Tara Menk · Answer

Yes, he walked the property and even had to return to the property a second time due to the tunnel door being locked on the first visit. If, for whatever reason, no value can be assigned by this company, I assume I would have to pay to request a second appraisal? I don't expect I can get my money back, but the idea of having to pay a second time is upsetting.

Dustin Allen · Answer

@Tara Menk

If they can’t do their job, they should give the money back.

I would definitely ask for another appraiser. It won’t be easy but they should be able to come up with some kind of value for the property.

Appraiser can't appraise, now what???

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