Low BRRRR Appraisal - what next?

Question

I am doing a BRRRR and the appraisal came in well below what I think the property is worth. I did the Appraisal Rebuttal and got no movement. My options are 1) to go with the current appraisal and leave more skin in the game than I wanted to, 2) cancel out the loan app and resubmit in a couple weeks or 3) start from scratch with a different lender.

What would you do?

Jason D. · Answer

@Jim Haney I ran into this earlier this year. Did a BRRR that I was confident would have a value of $130k - $140k, appraisal can back at $115k. I told the lender that wouldnt work, and we appealed it. Didnt work, and the lender wouldnt accept another appraisal. We waited a couple months, switched lenders, and the next appraisal came back at $140k.

Kimberly Smith · Answer

@Jim Haney same thing happened to us a couple months ago. I fought the low appraisal and it took them a solid 2 months to come back and hold their ground (the appraisal the lender chose was in a different county and was way off on the assessment). Our solution: went with a different lender. The new lender, which happened to be the same we did the fix n flip through, used an appraiser that better understood the local market, and actually did the appraisal for the purchase too! This worked in our favor because the appraiser remembered what the property looked like before and could make a fair assessment of the work we did to it. The 2nd appraiser (or the original from the initial purchase) came back $40K HIGHER than the that low assessment! So, we cancelled the app with the first, and refi'ed into a 30 year fixed with the same company that did the fix n flip to begin with.

Kimberly Smith · Answer

@Eli M. aah my apologies. I replied to the lender when the low appraisal came back and provided data that showed the improvements made to the property, and asked for permission to have my realtor pull comps too. They agreed to go back to the appraiser with our rebuttal, and to include my realtors comps. The lender was hesitant to “push” the appraiser for a response once all information was sent over, so we waited about 2 months before the appraiser got back to the lender and stuck with their original assessment. That’s when we started shopping around. Frankly should have done it soon to get out of the hard money land an, but it was our first brrr and we didn’t know any better

Kimberly Smith · Answer

@Eli M. Zillow! Nothing fancy here.

Jim Haney · Answer

@Sarah Brown - yes, I think that is what I will do

@Andy Webb - I was hoping for it to appraise at $110,000 and it appraised for $77,000.  At 75%, this sets the loan at $57,750.  I am into it for just over $80k and don't want to leave the $22k in it.

@Mike McCarthy - The bank won't allow a second appraisal without cancelling the loan and trying again in a couple weeks.  I have reviewed the appraisal and it SEEMS like the appraiser just chose the worst possible comps!  Not that they were bad - I understand that is how the game is played.  However I had another property appraised in the same week, a half mile away with similar finishes that appraised for $106,000.  I understand that's just the way it goes, I am just trying to figure out my next step.

@Kimberly Smith - thanks - I think that is what I will do too.

@Jason D. - Thanks Jason, I agree.  I am just debating whether to use the same lender.  And I may do that because they already have all of my paperwork.

Eli M. · Answer

How did you fight it?

Eli M. · Answer

@Kimberly Smith

How did you find it?

Kimberly Smith · Answer

@Pete Abilla upstate NY

Pete Abilla · Answer

@Kimberly Smith where did you do this brrrr?

Low BRRRR Appraisal - what next?

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