Refi Appraisal Problems

9 Replies

Hi All,

Purchased a Duplex 2/2 for 160k a year ago; had to separate all utilities and upgrade oil to gas. Put in about 30k all said and done. Owner occupied.

Rent is pulling in 1250 a month. Mortgage 1140. Nice deal. So after going on Zillow I find out my property is now worth 205k. I qualify for 100 cash out refi but we just go the appraisal back at 160k. Sick joke or what. Granted the area's SFH sales are on the lower end and there aren't any Duplxes in our category that fairly compares. Duplexes 5 min away in other town/school district are going for mid200s-low300s. Unsure if I can argue that aspect.

The report listed various SFH comps and some real crappy Duplexes. Highest comp down the street is 199k for a 3/2. Appraiser basically is factoring a 40k price tag to each bathroom. He also wrote a diatribe about how the financial markets are weak and economy hasn't fully recovered, people have high CC bills etc. I mean wth is with that nonsense.

Thoughts/options?

@Jonathan S. Happened to me crazy low. Multi family purchase price of 825,000 appraisal came back at 570,000. Had to use a HML to close. I would try to go to a different back. Good Luck. My agent friend says that this has happened to him all the time.

@Jonathan S. , wait until you can find a specific comp or two that actually closes that you feel are great comps. Show them to the appraiser when he shows up.

Appraisers can NOT go "oh you spent $30k on this, it's worth $30k more." They have to use actual closed comparables and extract data from that. 

That being said, the commentary about financial markets and consumer credit card debt exposes the appraiser as letting his personal politics get into his job, which is unprofessional. Some appraisers also dislike BRRRRrrr, again as a personal political opinion / agenda. If your lender, I'd be internally petitioning to have this appraiser removed from our board (which I've done a few times before successfully). We aren't asking you to opine on American consumer debt, international financial markets, or REI strategies, Mr Appraiser, we are asking you for your best opinion of value WITHOUT your political agenda getting in the way.

This might be one where ordering a second appraisal will get the job done, depending on how skewed the opinion of value was by the appraiser's political agenda. 

It's always a little harder to get a good appraisal on multi family because of the lack of comps, at least in my area. I will say, don't look at Zillow to get an idea of what it is worth. Zillow's estimates are never even close.

Originally posted by @Blake Jarrett :

 I will say, don't look at Zillow to get an idea of what it is worth. Zillow's estimates are never even close.

 Wait, you mean to tell me that my home didn't appreciate 40% the day after I closed on my purchase?! Nonsense.

Duplexes can be difficult, if there haven't been any recent sales. It's still a residential property, which means that the income doesn't have much influence. 

I just got a creditline on some of my properties and the duplexes were all evaluated at 23k, even though I get $ 900-1000/month in rents. The fact is, that no duplexes sold. Every investor that bought one or more during the downturn in this neighborhood is holding on, because they're cash cows.  

Heck, the appraiser even used my own great deals of fixer-upper duplexes that I bought for 15K each a couple of months ago, as comps. Completely ridiculous. But the banks are no longer allowed to speak to the appraisers to give that feedback. 

Originally posted by @Chris Mason :
Originally posted by @Blake Jarrett:

 I will say, don't look at Zillow to get an idea of what it is worth. Zillow's estimates are never even close.

 Wait, you mean to tell me that my home didn't appreciate 40% the day after I closed on my purchase?! Nonsense.

A property is worth what what someone is willing to pay. This appraisal factor is fubar imo; should be based on a range not a set price. 

Originally posted by @Jonathan S. :
Originally posted by @Chris M.:
Originally posted by @Blake Jarrett:

 I will say, don't look at Zillow to get an idea of what it is worth. Zillow's estimates are never even close.

 Wait, you mean to tell me that my home didn't appreciate 40% the day after I closed on my purchase?! Nonsense.

A property is worth what what someone is willing to pay. This appraisal factor is fubar imo; should be based on a range not a set price. 

And if someone has the money to buy it they are free to go ahead and do so. However if you want to borrow the money from someone else to buy a property, then that person is free to set the conditions at which they lend out their own money. 

@Jonathan S.

Zillow is a group of properties that anyone can post anywhere. No licensed agent uses Zillow to get a realistic value or comp of a home. Give them an idea yes but to trust for a comp to get an appraisal for cash out, sale, refi, and/or anything else definitely not. Use on qualified closed comps. 

In this situation I would talk to the appraiser and get in full writing his decision on value and get a second appraisal done. If that appraiser is using Zillow, they aren't very professional nor good anyway. 

Originally posted by @Russell Brazil :
Originally posted by @Jonathan S.:
Originally posted by @Chris M.:
Originally posted by @Blake Jarrett:

 I will say, don't look at Zillow to get an idea of what it is worth. Zillow's estimates are never even close.

 Wait, you mean to tell me that my home didn't appreciate 40% the day after I closed on my purchase?! Nonsense.

A property is worth what what someone is willing to pay. This appraisal factor is fubar imo; should be based on a range not a set price. 

And if someone has the money to buy it they are free to go ahead and do so. However if you want to borrow the money from someone else to buy a property, then that person is free to set the conditions at which they lend out their own money. 

 Maybe but the primary factor is the borrower's ability to pay the loan and the fact a Lending Institution isnt a person with the forward insight/desire to resell a foreclosure for profit. 

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