The Woes of the Appraisal when Refinancing

The Woes of the Appraisal when Refinancing

Real Estate Agent · Rock Hill, SC · Member since 2014 · 86 posts · 46 votes

It is extremely frustrating trying to do BRRRR deals in an area that doesn't have a ton of comps. The appraisal seems so subjective to what mood the appraiser is in when they do they appraisal. I am currently looking to refinance a property in Carbondale, PA and have begun the process with a couple of banks. The banks offered free appraisals, so I figured I would see which one provided the higher value, and go with them. It is amazing the range of appraisal values that came in. 1 came in at 90,000 but completely forgot to include the garage in the value. When questioned about it, they said I was right, but it does not change the value...how? I thought oh well, the other one will include the garage, so it should come back maybe slightly higher. Instead, it came back at 78,000, and used properties over 10 miles away for comparables. How is is this possible? I get a 12,000 difference in opinion may not seem like a lot when you are talking about more expensive properties, but when you are looking at 16% of the value of the property, that is astronomically wide ranging. Especially when I did a similar sized property 3 years ago that appraised for 120,000 just down the street. It's like they just make up a number sometimes. Has anyone found ways to combat this? Does anyone have any recommendations for banks in Scranton/Northeastern PA? I am beyond frustrated

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  • Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
    6y

    Well, @Chris Lounsbury, there is a bit of a rub there. Many appraisers are loathe to materially change an appraisal as that calls into question all the other appraisals they've done...

    You can try 2 things:

    1. Have conversations with the lenders about the appraisals and why you think they're flawed. Make sure you have back up, especially better comps.
    2. Pay to have your own appraisal done. The bank likely won't accept that alone, but it will be a strong argument. Just be prepared that it may come back at $80-90k. That really may be the ARV. There is a chance that the $120k house was a true outlier.
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