Residential Real Estate Broker · Paso Robles, CA · Member since 2015 · 196 posts · 58 votes
Hey guys I was on my way with PenFed and the appraisal (the drive-by one they do after their desktop comes back lower than expected) came back way low. $45k under the appraisal from my refinance from just 1 month ago. The "appraiser" used completely irrelevant comps in a different neighborhood when there are literally 3 recent sales on my same street and 2 in my exact same floor plan. So now the only options are to pay for a $600 appraisal and hope that one comes back correctly or move forward at the value the first guy gave and go the route of a 90% LTV HELOC instead of an 80% LTV HELOC which is 4.75% versus the 3.75%. Problem is that I'm shopping around and everyone elses rates are like mid 4's to low 5's for an 80% LTV HELOC so even taking the 90% LTV option with PenFed I'm still on par with the competition it seems. Anyone have some recommendations on either disputing the current appraisal so I don't have to pay for one or other bank recommendations? Thanks everyone.
Yes, I was sure to let them know they lost my business because of such a bad appraisal. Didn't even want to waste time with a paid in-person appraisal at that point.
@Patrick McCandless You should be able to dispute, and present other pertinent information (Comps). That's strange they just did a drive by. Is this for an investment property, or your primary? I work for a company that specializes in 1st position HELOCs, and our program requires a full appraisal, because the line of credit that's set-up is based on that value. So with that 30-Year draw period we always want to maximize that appraisal and thus equity access for our clients.
@Justin Phillips Yes the order of events that they go by is 1) Automated desktop appraisal and if that doesn't come back with the number you expect then... 2) They hire an appraiser to do a drive by, snap a few photos, and pull 3 comps. Then if that still doesn't come back with the number expected... 3) Borrower pays for full appraisal. I'm now at #3 since the first two didn't pan out. The last I heard was that the drive-by appraisal can not be disputed, but they were looking into "what can be done at this point without having to go to a full appraisal".
@Patrick McCandless That's so strange, especially if it sounds like you have solid comps. It may just be their way of staying extra conservative on it. So at this point, it's probably just a matter of ROI on that appraisal fee. It sound like it will make sense based on that appraisal from a month ago, and the lower rate. I would definitely recommend checking out a first position HELOC as well. My wife and I got one on our little Investment Condo in SoCal, and I liked it so much that I left my job in medical sales to join the company. It has some great benefits for investors. Either way, can't go wrong opening a Heloc at these values!
Find another lender. I've recently had the same exact thing happen. Desktop appraisal came in about 100k lower than expected. The data they used was awful. They comped houses almost 10 miles away and about a year old. I've never seen something so wrong in a real estate transaction. I threw that appraisal and lender in the trash can and found someone else. The desktop appraisal from the new lender came in about 20k lower than what I had hoped for, but still ended up getting the HELOC for more than I needed so it was a win in the end.
@Bob Okenwa Who did you end up going with? Like I said, I have shopped around and I am having a hard time beating PenFed's rate even at the 90% LTV tier. So it's almost like I might as well stick with them and either take a chance at the paid appraisal coming back where I need it so I can take advantage of the <80% LTV rate of 3.75% or just do the 90% LTV rate of 4.75% and save the $600 or whatever on the appraisal since it's still lower than the competition.
I went with National Bank of Arizona. I got an introductory rate of 1.99% for 9 months then 4% or 4.25% thereafter.
Sounds like you're caught between a rock and a hard place. I decided to use another lender because I lost trust in the original one with the terrible appraisal. They knew their appraisals were garbage and still trusted their automated appraisal company anyways. Bad business in my book.
@Bob Okenwa Yes I am! I like the sound of the 1.99% intro rate. I wonder if they will work with me being in CA? I did actually find a local bank who is at 3.75% as well now that I'm going back through my notes. I think the reason I went with PenFed initially was because they don't base the interest rate on credit score and if I need to bring my wife in to qualify for DTI purposes she didn't have a 740+ score at the time, but she's close now. Guess I know who I'm calling today!
These sorts of things have happened to me many times as well. Frankly, I find it bloody frustrating and easily avoided, so easy to avoid I'm astonished when these issues come up. I really hope you guys informed the lender that because they chose a moron appraiser, they're not going to get any business from you or anybody else you know for the rest of existence.
Lenders and appraisal management companies need to be put on notice that if they choose to use morons to do the appraisals, it is the lenders who will suffer.
Yes, I was sure to let them know they lost my business because of such a bad appraisal. Didn't even want to waste time with a paid in-person appraisal at that point.
Man, just had a very similar experience with PenFed. I was looking forward to working with them since they now have a 6-mo intro rate of .99% and 4.25% for the HELOC ongoing. My 3-flat did not qualify for a desk or drive-by appraisal, so they sent out someone (at cost of $705 to me) to do a walkthrough, and the appraisal came back about $13k lower than my recent refinance. Not the end of the world, but I was really surprised at some of the comps and evaluation standards that were quite different than the refinance appraiser submitted.
Long story short... I went back and forth with PenFed on what I considered factual errors, but the appraiser refused to budge and the PenFed appraisal desk ultimately supported him.
I was hoping to access 90% LTV ...about $50k in equity but now will only be able to access about $40k.
I don't want to go through the whole process again with another lender though...bother my tenants, have a hard credit pull, and run the risk of potentially another appraisal wildcard.
I guess it's just part of the game, but sure wish there was a more standardized approach in the appraisal industry.
I'm in a similar situation right now, I just had the drive-by appraisal done on one of my 3 properties. Drive-by appriser used totally irrelevant comps and had over 11 comps for $200-300k over his apprised value within the last 3 months. An annoying process when you have plenty of MLS data to support.