Rental Property Investor · Dallas, TX · Member since 2019 · 4 posts · 1 vote
Hi BP Family!
I'm currently in the process of trying to get a HELOC to get some money for my next deal. The bank didn't do a full appraisal, but instead used an online system called an AVM appraisal, and said my home is worth $198K.
I thought that was low, so I asked my agent to pull some comps for me, and according to the comps, my home is worth about $224K.
When the banker told me the appraisal came in at $198K, she kept saying that was really good because the county only had it appraised at $170K (I have protested my taxes every year since I moved in 3 years ago). Does the county tax assessment matter when it comes to an appraisal?
The AVM appraisal was free, but a full appraisal would cost $500. Should I pay for a full appraisal? I'm worried that I may be overestimating the value of my home. It is mostly updated, but needs some finishing touches such as new flooring in the bedrooms and probably some better landscaping.
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
4y
Welcome! No, the value for the property assessment has no bearing on anything. Comps are so very important.
Desktop underwriting often does produce a lower value vs a full appraisal. You can ask this lender if they will do a full appraisal. I show comps and items that I have upgraded when I do meet an appraiser, so they know that I put in flooring, windows, kitchen or whatever.
I often pull my own credit, call around and ask all local to the property lenders, "With my FICO of ZZZ what can you offer me in terms of interest rate..." I build out a table and choose the one that suits me, without having them all pull credit.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
4y
Are the comps closed sales in past three months with same or similar square footage, room count, and lot size? The appraiser won't use cash sales, only ones with loans. Before you throw $500 at the idea make sure you have the data. Tax assessor doesn't see the AVM BUT HOWEVER they have an AVM tool and human appraisers, appraiser does see the tax assessment - which may not have bearing on current value as is set from value when you purchased. Yes the appraiser and AVM see the price you paid as well.
Rental Property Investor · Dallas, TX · Member since 2019 · 4 posts · 1 vote
4y
@Kerry Baird thanks for the reply! I decided to go ahead and pay for a full appraisal because according to the comps it should be worth. I'll definitely be giving the appraiser a list of the comps I pulled along with the improvements I've made.
I like that idea of pulling your own credit and using that to shop around!
Rental Property Investor · Dallas, TX · Member since 2019 · 4 posts · 1 vote
4y
@Caroline Gerardo Thanks for your input! Yup the comps seems like they are close enough to my house. I feel better about it too because my realtor pulled them for me so I was able to see what the comps sold for not just what they were listed for, like you normally see on Zillow or Realtor.com.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
4y
@Kerry Baird Desktop Underwriter is Fannie Mae's automated engine it is not used for a HELOC to generate value. HELOC's are Underwritten according to whatever bank/company standard and an AVM is used which is a software based automated valuation tool. ATOM, Corelogic's RealAVM; ClearAVM; VEROSvalue; Black knight are some examples. Zillow uses one, but that went VERY badly in the news lately.
A person cannot pull a mortgage credit report. You need to get a mortgage credit report from a lender to use for rate shopping. Many will give you a copy but it's not transferrable for Underwriting, it's helpful to give a quote. When an individual person gets a credit report from freecredit or Experian/equifax/TU it is a consumer credit report - not the same type as used in mortgage today.
Some HELOC lenders are looking at using a Vantage score, another topic...
Banks such as Wells and Citi stopped doing HELOCs this year.
May I repeat: make sure the comps are not cash sales, the appraiser won't like them.
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
4y
@Caroline Gerardo, thanks for the information. Two of my local credit unions used that wording, getting a desktop valuation. I appreciate the clarity in your response.