Appraisals for a remodeled home

[Brandy Carrero]

So we purchased a foreclosure using a hard money lender and completely gutted the home, remodeled it with high end finishes. We are now looking to refinance the home (it’s our primary residence). When we applied for a refi and appraiser came out, but he appraised our house using the same comps as in the area. The comps in the area are nothing comparable to our new home. We have quartz countertops, bifold aluminum doors (4 large open doors), beautiful new kitchen with crown molding cabinets, waterfall kitchen island, ancient stone wall in our living room, all hardwood floors, etc. they are comparing my house to houses with carpet, old cabinets/kitchen, etc.

Is this fair?

[Chris Mason]

Originally posted by @Brandy Carrero:

So we purchased a foreclosure using a hard money lender and completely gutted the home, remodeled it with high end finishes. We are now looking to refinance the home (it’s our primary residence). When we applied for a refi and appraiser came out, but he appraised our house using the same comps as in the area. The comps in the area are nothing comparable to our new home. We have quartz countertops, bifold aluminum doors (4 large open doors), beautiful new kitchen with crown molding cabinets, waterfall kitchen island, ancient stone wall in our living room, all hardwood floors, etc. they are comparing my house to houses with carpet, old cabinets/kitchen, etc.

Is this fair?

 Appraisal fees haven't tracked with cost of living increases in decades. That means it's a volume game for them, not quality. As a consequence, one of two things to happen whenever it's a questionable appraisal:

1) You change the world and appraisal fees are doubled across the board. Now that they don't have to churn through so many of these just to put food on the table, we will get higher quality appraisals. 

2) You have to do half the appraiser's job for them.

In your case, what that looks like next time is you hand the appraiser a list of comps in two columns: not upgraded, and upgraded. Then at the bottom you put mean, median, high, low, and show that your upgrades clearly add value in the current market.

As always, comps are CCCR:

- Close

- Comparable (except for your "not upgraded" list, which is there for a specific purpose)

- Closed

- Recent

Last appraisal I ordered for myself personally, I did something like that and it came within 1% of my expected appraised value. It wasn't realistic to expect my LO or anyone else to do this, how could any of them know about the house I own and neighborhood better than me?