Lots of offers but appraised low
Member since 2024 · 12 posts · 5 votes
Hello everyone!
We’re currently flipping a home in Maple Heights, OH, where most homes are 3-bedroom, 1-bathroom layouts with unfinished basements. To maximize the living space, we worked closely with the city to create egress window codes, allowing us to add an additional bedroom, a beautifully finished bathroom, and a family room in the basement. Our remodeled home has received multiple offers at or near the asking price.
Unfortunately, we've hit an issue with the appraisal. Despite the Ohio Building Code recognizing the basement bedroom as a legitimate bedroom, the appraiser did not include the basement in the general living area (GLA) and didn’t assign much value, if any, to the additional finished space.
Has anyone dealt with this challenge before? Any advice on how to address this appraisal issue would be greatly appreciated!
Thanks!
Michelle
BEFORE THE APPRAISER ARRIVES:
Did you receive multiple offers and/or over asking price? If Yes, send your best 3 offers to the appraiser prior to their arrival.
For a reconsideration of value (ROV), I suggest the following:
Please review the appraisal for any clerical errors regarding the subject property and comparable sales. Here are a few key points to consider.
• Stronger Comparable Sales: Are there better comparable sales that should’ve been used? This is your best opportunity for a successful reconsideration of value.
• Clerical Errors: Are the square footages, bedrooms, bathrooms, and lot sizes accurately reflected? For the subject property and comparable sales?
• Off-Market Sales: Were any off-market transactions missed? Check county auditor sites or Realist’s public records for this data.
• Adverse Features: Do any of the comps have issues not considered in the appraisal, such as proximity to a high-traffic road, sewer plant, or power lines?
• Recent Sales: Have any new, more relevant comparable sales occurred between the date of appraiser’s visit and now? If so, there may still be a chance to include them in the appraisal report.
• Sales Recency: Did any of the comparable sales close more than three months ago? A time adjustment may be needed for accurate valuation.
• Geographical Competence: Is the appraiser familiar with the area? If they're located two or more counties away, their expertise in the local market may be limited. The lender will likely ask how many appraisals they’ve completed in the area of the subject property. If there are too few, the lender may "throw out" the appraisal.
• Lastly, the appraiser likely stated that the market is "stable," but that is worth contesting. We can likely agree that the market has been "increasing" steadily over the past decade.
And as a last ditch strategy, ask the Buyer to work with a different lender (I'll do their loan if they want) and the new lender will order their own appraisal.
@Michelle Glover a suggestion for any future flips. I make sure to be there when the appraiser is visiting the home and print out data on appreciation rates and comps and give him/her a personal opinion on where we believe the home should be appraised at. You could also ask your realtor to do this if you are using one. This has helped me tremendously!
Thanks @Michelle Simoni! I will definitely give this a try. We did not use the appreciation rates and I like that you are bold in giving your opinion as an expert in the market after doing your research and presenting the data.