HELOC appraisal value lower than expected

17 Replies

I am currently going through the process of a HELOC application with a local bank, and have just completed the appraisal step. The value of my home came in a lot lower than expected. The appraisal came in at $270,000, but when running the comps with my mortgage broker we came up with a value of $305,000. How could these numbers be this far off?...and is it typical for appraisals related to helocs coming in at a lower value? Are there any steps that I can take for reconsideration or a re-evaluation of the appraisal? Thank you

Appraisals for HELOCs and refinances are always going to be much more conservative than on a sale.

@Jared Standiford have you received a copy of the appraisal?  Was it a system generated value from the bank?  If it was a full appraisal that you had to pay for up front then there should be an allowable challenge period that you can use to debate the value.  You'll need to show different/better comparables but if it was a system generated appraisal you may just have to try it at a different bank.

@Jim Adrian no I did not pay extra for the walk through. But I did talk to the banking officer and he is going to submit a request to have a full appraisal but I'm not sure yet if I will be required to pay that out of pocket. Thank you for the response!

@Andrew Postell it was not a full appraisal and I did not pay up front. I'm understanding now from these responses that there are different types of appraisals. So I talked to the banking officer and he is going to request a full appraisal. Thank you for the response!

Hey Jared, I ran into the same thing with two banks and I live in a less than 10 year old national builder community where all the homes sell within a very tight price per square foot.  It takes all of about five minutes and a napkin to determine a house value in this neighborhood.  There was a comp on one of the appraisals with the same model as our house that was 500 square feet smaller than ours and the appraisal came back on our house with a lower value than that home.  The appraisals all came in at $90-93 per sqft and there likely have never been any sales in the surrounding five miles at that price....ever.  When there is not target to hit, like a mutually agreed price, the appraisers and lenders can choose to be conservative.  Good luck, I know it can be very frustrating.

I had a full appraisal done as well and it came in worse than the drive bys.  The appraiser used much smaller homes than ours and added the incremental sqft at only $33/sqft, which must be some standard they use.

I just got a new HELOC on my primary home. The first bank had a drive by appraisal done and it was very low. I then went to a different bank who had an in home appraisal done and it was 80% higher (where I thought it should be).

Ask for in home appraisal.

I've had issues in the past with appraisals as well. Its very frustrating. Especially when they use comps from far away and a much different part of the county where prices are much lower. I even had an appraisal where pictures included with the appraisal report where NOT my house and street. It gives me no confidence in these so called professionals. I actually disputed the charge for an refinance appraisal once as a result of this and they agree to eat the cost because they knew the third party appraisal did such a lousy job.  

Just wanted to update this thread.  I had a walk through appraisal done and the appraisal came in at $305,000.  $35,000 more than the first.  Pretty unbelievable, but it all worked out for my heloc with a ltv at 89% I got $43000 out of my property.  Thank you all for the advice and comments:)

@Jared Standiford When we know of an appraisal that will be taking place on one of our properties, we always give them a list of upgrades that we have done on the house along with pictures. We did this with our primary when we got our HELOC and it came in at around the actual market value which we then have since used to flip houses with in Arizona.

This is something I need to remember for the future. I'll be applying for my first HELOC later this year on the equity I'm currently creating in this live-in flip. I absolutely want someone to walk through the house and see the amazing things! I would be devastated if they only drove by! I intend to print before/after pics and put together a whole "appraisal packet" to encourage a nice number. Congrats on getting yours adjusted!

Hi all.. bumping this thread as I recently am dealing with this. The house was purchased for $325k and was going for an HELOC of $290k. This was reduced to $240k (through TD Bank). They did a walk through inspection and very surprised that this was this low.

As they did a hard credit pull, I'd rather not start the process with another bank (and get another credit pull).  The house is in a flood zone (AE).  The house across the street is just now on the market for $374k and about 300 sq feet larger but not as tastefully done.

Curious to see what the thoughts are on switching banks (if that would really matter) or somehow appealing the decision or just sticking with the $40k less?  

In truth, because it's in a flood zone, the cost of insurance for the $250k is high and bumping to $290k required me to get an additional policy to cover the $40k difference between the maximum $250k flood and the requested amount.  So it may be a blessing in disguise, but wanted to check with the brain trust.

I'm more leaning towards letting it be as the supplemental insurance would be an additional hit and as much as I'd like the extra 40K of spending power, I wasn't sure if it was worth it to add the supplemental insurance on top of the already expensive flood insurance.


I'm going to bump this as I am in a similar situation.  My credit union uses ValueCheck software.  Bought my primary residence 16 months ago, value comes at exactly what I paid for it.  Only 10 units in my building, despite an insane amount of comps on the local area, I bought $245/sq ft, comps here in downtown denver at 300 to high 300's/sq ft. Zillow says $330k, realtor gave me a higher number.  Credit union will only use the valuecheck, which apparently will only look at sales in the exact same condo complex.  I was the most recent purchase.....   Would have been nice to know this before the hard pull.  Sooooo next week will be calling banks and figuring out how the get the valuation.  Otherwise, $600 for a true appraisal. 

What credit union? Don't trust Z, they can be horrible at values. Call a couple of agents and get some CMAs done. Or shoot me the address, and I'll send you some comps. If you want the $$, then sounds like you'll need the appraisal. Take the comp value and tell the bank that is what it is worth. The appraiser will see that, and any comps you supply them from a Realtor (and any upgrades.) 

Good call Matt.  It was Westerra CU  (they did have good rates)-- as an update, I talked with a few other places who use other systems.  BBVA got me the computer appraisal at $64k equity, and they are willing to pay for a true appraisal as well.  Not as ideal of an interest rate and a $75 annual fee, but a solution nonetheless.  

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