wildly different appraisals

11 Replies | San Antonio, Texas

Thought about buying a house to rehab. Wanted to do it right so got an appraisal. House appraised ARV 635k

House was done.  Time to get a mortgage.  House appraised for 561k.  We didnt really care, that could be chalked up to difference of opinion.

Heloc applied for to be taken out.  House appraised for 470k.  The appraiser, instead of counting the second stories square footage, included it as an extra, such as what you would do for a casita or a pool and adjust like 15k.   So our valuation, instead of being on 2700 square feet like the first two appraisals, was done on 2100.  

What the F? 

We’ve had weird valuations lately too. None coming in high. All low. Much lower price point for ours than yours and they aren’t lasting on the market. I don’t understand it either. Seems to be a trend from all of our friends who are also in this business. Maybe an appraiser will chime in here. 

Helocs will always be the most conservative appraisal. Refinance will then be second conservative and purchase price will be least conservative

arent appraisals done by appraisers, licensed by the state, who dont work for the entity appraising the property?  How would an appraisal come back as a different value for a heloc vs a refinance?  

Is that really how its done?  Thats not right.  

Believe it or not, appraisals are very subjective. They probably should not be as varied as yours was. All you have to do is prove to the appraiser that he is wrong in his assumptions. They will take the facts that are presented and make a decision. You just have to take them facts. 

Is the attic space that was converted accesible to the main house or do you have stairs outside? If you truly made it a part of the house, let them know that it should be counted as main house square footage. If it is seperate then its not a part of the house, its like a casita.

If all else fails, go to a different lender for the heloc.

That is odd.  Basements are typically treated this way, but not second stories.  Is the second story an addition or some type of unique add-on?  

I would like to understand the rationale behind this....always good to learn.  Let us know if they provide some explanation.

Residential appraiser here. That's very strange. Was the second floor converted? Is it finished space with heating/cooling and normal ceiling height? 

I would advise you check with your local assessor and see what square footage has been recorded on public record. That is the GLA the appraiser is supposed to use. Did they physically measure the property when they came? The purpose of doing that is to verify that what's been recorded is up to date. Public record is the standard we have to go by unless there is concrete evidence that what has been recorded is erroneous. Some counties are very meticulous with keeping track of property data and some are not. I hope you're in one of the former. 

Now, with all of that said just be aware that the higher appraisals aren't necessarily the accurate appraisals. If the appraiser deviated from public record without justification or explanation in the report then they are in the wrong. Yes there is some subjectivity in appraisals, it's not an exact science but often times when the range of opinion is that huge it's because the appraiser didn't take the time to verify all of their data or isn't truly that well-versed in their market and didn't disclose that fact to the client and take measures to rectify that (i.e. consult other real estate professionals in that area to ensure that their adjustments make sense). 

I hope that helps. Feel free to PM me any questions. Happy to help if I can.

Originally posted by @Steven Mitchell :

arent appraisals done by appraisers, licensed by the state, who dont work for the entity appraising the property?  How would an appraisal come back as a different value for a heloc vs a refinance?  

Is that really how its done?  Thats not right.  

Lenders pick the appraisal management company that picks the appraiser. Lenders can elect to use an AMC that's known for using more or less conservative appraisers.

I once had an appraiser ask me “Are you looking for a high number or a low number”. No kidding; just like that! Since I was not looking for either I simply asked him to be as accurate as possible.

Originally posted by @Rick Pozos :

Believe it or not, appraisals are very subjective. They probably should not be as varied as yours was. All you have to do is prove to the appraiser that he is wrong in his assumptions. They will take the facts that are presented and make a decision. You just have to take them facts. 

Is the attic space that was converted accesible to the main house or do you have stairs outside? If you truly made it a part of the house, let them know that it should be counted as main house square footage. If it is seperate then its not a part of the house, its like a casita.

If all else fails, go to a different lender for the heloc.

 Hey Rick,

There are some gorgeous stairs inside and the second floor is very well done.  The ceilings arent the 15 foot high ceilings of the first floor, so maybe that confused him?  It even has a bathroom.  And  a door to a second floor deck.  

It looks like yes Im going to have to go to another lender for a HELOC. What a pita.

Per josane, the only actual expert to chime in so far.  Did you check with the public records and make sure they have the new accurate square footage?

As a Buyer I’ve been the beneficiary of low appraisals on bank sales where they have the original square footage listed in the appraisal because, as she mentioned, they almost always go by public records. 

We did have it measured by a professional before it was purchased as we had a feeling the square footage wasn't reflecting correctly in the tax records and both of the other two appraisals reflect that. Second story has 8ft ceilings, is heated and cooled by central HVAC and as Steven mentioned, has a bathroom, windows and access to the exterior of the house. Also, we had several RE agents do CMA's and they have all agreed with the other two appraisals.