Refinancing my Rental

[Ariel K.]

I purchased a 4plex in late 2018 in Ohio. The property appraised as a 4plex and I got a Fannie 30-year fixed mortgage with no issues. Credit and income are no problem at all. Purchase price was $80k.

I am trying to refinance and pull money out, so I went to get another Fannie loan, 30 year fixed and that's when the issues started. I got an appraisal and the amount came out to $125k, however, it was listed as a 3-unit + ADU. The bottom unit is below grade and "inferior". The property is zoned single family and I called the city zoning who told me that it wouldn't be an issue to rebuild should something happen but the appraiser said the highest and best use was a SFH. I challenged this appraisal and lost.

I went to another bank who ordered an appraisal from THE SAME APPRAISER. I’ve tried to go to other non-QM lenders and no dice. One turned me down, another wanted a very high number of points (3.75 for a 4.9% 30 year loan). Should I get another appraisal and request a different appraiser? Is there a lender who can help?

Thanks!!

[Will Fraser]

That stinks to hear of, @Ariel K.!  We're seeing the seem king of drama in Oklahoma recently (the past two years or so) and it really does come down to the specific appraiser on things like that more often than not.  One specific example I'm thinking of was like this . . . first appraiser came in and said that a 4-unit property built in 1940 (i.e. before city planning) was illegal non-conforming and therefore they will only could the main house.  This was horrendous for the client, who had fully renovated all four units.  Calls and visits to multiple different government departments was a wild-goose chase and it was going to be many thousands of dollars to do what the appraiser insisted HAD to be done.

Then a different bank ordered a different appraiser and it appraised, as it should have, as a legal non-conforming and the value "jumped" to the real value a solid $180k higher than the first appraiser's valuation.  Boo to the system's hamstrung dependence on appraisers!!

Regarding Ohio . . .what are the odds that a different bank would order an appraisal and the same person would be there for round 3?  Unless the area is very small or the property very atypical this seems unlikely, right?