Recourse on Shockingly Bad Appraisal?

[Ryan Klemetson]

I am attempting to refinance a foreclosure that we purchased 7 months ago. The home is an updated 3 bdrm 2 bth in a B neighborhood. Homes in the neighborhood can sale anywhere from  $160k to $120k, at the very low end. The appraisal came back at $109k, and some of the comparable homes are laughable, 2 bedroom 1 bath homes that are 6/7 miles away in a different class of neighborhood, while not including the house across the street that sold for $160k. I plan to have a conversation with him about the homes that he did and did not pick, but if that fails do I have any recourse? Any other recommendations?

[Joe Villeneuve]

Usually, if you have reason to believe you got a bad appraisal (i.e. got screwed...it's common), you can complain to the lender, and if you have facts backing it up, the lender MAY, throw out that appraisal, and go to the next person on their rotational list and get a new one.

Rules say, you or the lender can't talk directly to the appraiser before the appraisal is done.  They can't hand pick one either.  The lenders have 5 or 6 on rotation.  As they come up, you get them.

Here's what we do.  We're proactive.  

1 - We ask our lender (refi) who the most aggressive appraisers are on THEIR list.
2 - When we know we are looking to refi a property, we get one done by this aggressive appraiser first...and since this is not (at the time) being done to get a loan...we can talk to (help) the appraiser.
   Now, this doesn't guarantee that when the time comes, this appraisal will be used.  It does however give us ammunition to fight with if the actual appraisal done is like the one you got (and we've gotten before we started doing this.  If you're lucky, (remember, the appraiser you used IS from the lenders list), the new appraiser might be the one you used...and/or if not, the new appraiser might use the appraisal you got as a starting point.