Sellers past low appraisal not disclosed - do I have recourse?

Question

Hey all,

Using my VA loan to buy a personal home. We have been under contract and appraisal just came back super low.

Going through the ROV process, but just found out an interesting bit. The house was under contract before, and the sellers told us "financing fell through due to covid job loss."

Come to find out, that was complete BS. The deal fell through because the appraisal came in $19k under contract.

Well, same just happened to me, and seller wants out to go conventional. And now I've spent $1k getting inspections and appraisals done, when this could have all been mitigated from the start.

Do I have financial recourse (or other recourse) here?

TIA!

Russell Brazil · Answer

No where do I know of is an appraisal something thats required to be disclosed.  A previous appraisal would not be something Id care about. Get 10 appraisals done and youll get 10 different values.

Eddie Brady · Answer

Hi Josh. Did you use an agent for this deal? Some residential sales contracts specify steps that must be taken before legal action, such as mediation. It may be very hard to prove that the appraisal was the actual reason for the last deal to fall through and most states wouldn't require the last appraisal price to be disclosed to you. Appraisals are an opinion of price. One appraiser can differ from the next greatly.

A different route to take would be to look at which comps were used in your report and if they were the most comparable to your subject property. If you find better comps that support a higher price, you could ask for them to be forwarded to the appraiser. This still doesn't guarantee the appraiser will change their opinion of price.

Stefanie Jensen · Answer

@Josh Thomas

Supposedly FHA appraisals stay with the property. So any FHA appraiser will have access to previous appraisal on a property that were also done FHA. I would honestly have assumed that it would be the same case with the VA appraisal.

If someone is getting a conventional loan, the appraisal is kept private unless the buyer is using it as leverage for a price reduction. Conventional loan appraisals would not be disclosed.

It’s so frustrating when the seller refuses to bend on the price when the appraisal comes in lower. It’s not fun for anybody, but more than likely the same issue will keep coming up for every subsequent potential buyer.

Alan Lacey · Answer

@Russell Brazil switching lenders on a VA deal won’t matter. VA has county appraisal roster, and if they have appraisal on record new lender would use same one. Appraiser should have given tidewater notification giving agent opportunity to provide comparable to support listing price.

Russell Brazil · Answer

Switch lenders to get a new appraisal. I just did that on a bad appraisal a few weeks ago. Original appraisal came in $40k low.....new lender said it was such a good deal, they only did a desktop appraisal (computer generated appraisal) instead of a full one.

Stefanie Jensen · Answer

@Russell Brazil

I have actually heard that because of Covid, some appraisers are allowed to just look at the exterior of the property without ever entering it to see the actual condition. There is a ton of information on the MLS to help them evaluate the property and find comparables, but there’s no better way of understanding the true condition of a house than by entering it. We’ve all been duped by good photos before.

Steve Morris · Answer

Well, if your PSA says that any prior inspection reports or appraisals within seller's control and knowledge need to be provided and the PSA was mutually accepted, then you have a chance, I guess.  Depends on what you specified for liq damages.

Asking for past appraisals doesn't happen often.  However, I've had it happen when we knew it existed and it was recent.  Purpose was to save the cost of the re-appraisal, but acceptance is a lender thing.

Caleb Heimsoth · Answer

@Josh Thomas no you have zero recourse

Nicole Heasley Beitenman · Answer

I hope you find a way around this appraisal. I'm not sure why appraisers can do whatever they want without being questioned; I've had very few good experiences with appraisals. We feel your pain!

Josh Thomas · Answer

Thanks for the quick replies guys! Yeah, so the appraiser won't play ball, so trying to go through VA now.

Whats a bummer is the house is definitely a fair price, but the appraiser is using a comp from what is clearly a distressed seller situation. House sold for 70k below next lowest. And it was closed back in October.

Almost 100 homes sold in the subdivision this year and this guy goes back nearly 12mo to use the one on the same street with clearly something else going on outside the properties value itself.

I guess we will see what the VA has to say!

Sellers past low appraisal not disclosed - do I have recourse?

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