# Appraiser's are killing me.



## BobDFL (Jul 7, 2006)

Last year we got a construction loan to build a house on our property (5 acres). The appraiser at that time appraised the property plus the new house at $675,000.

So we started building knowing full well we wouldn't go over $525,000 at the worst (we ended up at $516,394 to be exact including the original mortgage for the land). 

Well we are converting the construction loan to a permenant mortgage and the new appraiser appraised the completed house at $450,000. 
For what the appraiser has appraised the building for it doesn't even cover the cost of the materials to build the house. 

What's even more annoying is that the property across from me, has a tax appraisal higher than that ($513,000) and it is on only 2 acres and roughly the same size. 

What's worse is that they said the price was low because there haven't been any homes sold in the area. Well that is because they didn't look at closed sales (from developers or by owner sales) were the sale isn't listed in MLS. If they had done that, I found 6 comps from Oct-Dec of 2007 (the most recent I could get from public records) that all sold for between $520,000 - $675,000 and all were on .18 - .25 of an acre. 

Plus there are 2 developments less than 3 miles from me that have comprable houses listed for between $409,000 - $495,000 on .18 - .20 of an acre.

If I can't get this straightened out soon I'll be in default of the construction loan and will be foreclosed on because I can't find financing. Which will kill our credit rating for any future purchases (we're at a 815 credit score right now).

So what is it with these appraisers? No wonder there is a mortgage crisis. If they had appraised the building last year at the $450,000 (or even $550,000), we wouldn't have started building.


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## CarolynRenee (Jan 30, 2008)

Who is the appraiser working for? If he/she is being paid by the bank, then they are working for the bank (i.e. more inclined to make numbers "work" in the bank's favor), regardless if the appraisal is on your home.

If the appraisal is that much lower, I would definately get a second appraiser out there & talk with them first, along with giving them the information that you found out about the other homes selling. Make sure the appraiser knows your situation and that he/she is working for YOU (it may cost you several hundred dollars, but better than being in default).

And I "believe" that appraisers use comps that have been closed in the last 6 months, but if there were others just over 6 months, I would "think" they would include that.

Also, if the market has changed drastically since you first got your loan, that definately would affect your new appraisal.

disclaimer: not a professional anything, just what I've heard / experienced


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## BobDFL (Jul 7, 2006)

I just got the original appraisal from the construction loan, and it clearly states that using the comps method the property is appraised at $670,000 and using the value method it appraised at $674,000.

I know we have had a drop of about 8% since then, which would put the property at $616,400. That drop is from real estate people I know and the latest press announcements.

We also paid for this appraisal but it was ordered for by the fiannce company. The appraiser wouldn't even talk to us after the appraisal and while she was doing the site visit, showed a definite attitude as if she was being put out, having to come down to our county to do an appraisal.

She even knock $50,000 off our value because we weren't in her county. She said that the comp she found that was priced at about what ours should be, was in a better neighborhood because it was in a different county. Even though that comp was zoned for a middl School that is now being closed down because it was built on an old military bombing range, and the High School has gotten 3 straight "F"s. Go figure.

As you can tell this has really gotten my goat.


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## davisdj (Feb 14, 2008)

I don't know about construction loans, but I do know about house sales. We have a house in Raleigh, NC that is going to closing later this month. We've owned the house for just at 2 years. 

We lost $20,000 on the sale - bought the house for $157,000, and sold it for $137,000.

It's the 11th house we've sold over the years, and the first time we've lost money. We even owned a condo in the same area for a very brief period (about a year) and sold it at a profit, and that was just about a year ago.

The market has simply collapsed.

Obviously, we didn't want to agree to such a loss, but after I ranted and raved and yelled a bit, and then calmed down and looked at the numbers realistically, it became obvious that our buyer is not trying to cheat us. He's actually a little frightened, because he's buying a house for $137,000 and knows that it's entirely possible that it will be worth only $130,000 in a year or so.

This is a terrible time to be selling property, or dealing with appraisals. (And we have yet another house on the market as I write this.:badmood

My sincere sympathies. I do agree with CarolynRenee and would seriously try to find another appraiser and see if you can get a new number.

Sally


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## donsgal (May 2, 2005)

BobDFL said:


> Last year we got a construction loan to build a house on our property (5 acres). The appraiser at that time appraised the property plus the new house at $675,000.
> 
> So we started building knowing full well we wouldn't go over $525,000 at the worst (we ended up at $516,394 to be exact including the original mortgage for the land).
> 
> ...


Well, since I live in a $7500 single-wide mobile home on 26 acres, with no mortgage, you might not think I am qualified to answer this. But I have a real estate license, so I am going to take a stab at it.

Since appaisals are market-driven everything is going to be lower now than it was in 2007. It sounds like things are really bottoming out where you are and it's killing you. I cannot imagine that the house would not appraise for it's current replacement costs, however. 

Since your credit is so good, do you think you could find a bank that would be willing to carry a second mortgage on the difference between the appraised amount and the construction loan amount? 

You might also think about tapping into "favors owed" and see if you can perhaps locate a golfing buddy or some such that might be able to cover you with a short-term loan until you can find another appraiser or another bank, whichever the case might be. You might also have a short visit with your attorney to see if there are any types of options available in the legal arena that could buy you a little time.

And finally, I think if I were you, I'd check out http://www.daveramsey.com and listen to a few of his podcasts so that maybe in the future you might avoid a similar bad situation.

donsgal


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## BobDFL (Jul 7, 2006)

donsgal, I wish I could do what you've done. We are currently in a Double-wide on the property and the fact that every year we need to evacuate at least 1-2 times because of hurricanes is really a problem for DW and DD's (I'm not thrilled with it either).

I guess what bothers me is that the appraisers are only looking at house resales and not the closed sales when doing their comps. Since this is a new house not a resale it doesn't compare to the 30 yr. old homes that are selling only to be torn down and replaced with new homes in the area (some with some really huge McMansions).

Actually the market in this area isn't as bad as elsewhere (I'm near Orlando). According to a friend who is an apprentice appraiser median home price has only dropped 7.7% in our area and the median home price has only dropped an average of 15% statewide, both of which be in the ballpark of what the lenders I'm working with (who are in FL.) and I beleive the true value is ($569,500 - $618,410). 

I've actually considered the 2 mortgage option if not only to drop the first below the Jumbo mortgage line, we'll just need to see were the monthly payments work out to (I'm not going to make myself house poor) and the total interest will be at the end of the note (we plan to be here for at least 20 years or more).


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## mnn2501 (Apr 2, 2008)

Where's the person that did the first appraisal? get them to do this one, or find another appraiser who's more open - sounds like you git a real dud. 
I know Orlando housing has dropped dramatically in the last year - 8% is a really low figure from what I have seen (been keeping track as we want to move back there someday) but then we're looking within Orlando city limits.


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## SteveD(TX) (May 14, 2002)

Appraisals reflect the value opinion of the appraiser as of the date of the appraisal. Not one day later, not 6 months later. Rumor has it that property values in many markets are going down at record rates. Florida included. You apparently got caught up in it. I'm not saying both appraisals are absolutely foolproof. Appraisers don't walk on water, no matter what people tell you. I would get the second report (the first one too, for that matter) reviewed by a third, very experienced local appraiser not connected to the deal. See if he just "missed it". Or if he missed pertinent sales data that led to a faulty estimate of value.

That's a huge loan. Is there anything that you can put up as additional collateral to secure the loan? What is the permanent lender suggesting?

Bottom line - don't shoot the messenger here. You may be just a victim of the local real estate slump.


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## farmergirl (Aug 2, 2005)

rose2005 said:


> You can appeal the appraisal and ask for another from another company. I'd get the original appraiser out, ( at your own cost), get some facts in writing of the other properties you have found, and head back to your bank.
> 
> Tell them the finance appraiser arrived with a snotty attitude.
> 
> ...


I agree about telling the bank that you felt the appraiser was unprofessional. It's worth a shot


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## BobDFL (Jul 7, 2006)

We're appealing the appraisal now but it just takes time. 

What gets me is that the appraiser is comparing apples to oranges. They are comparing older homes to a brand new home. I could see if there weren't new home sales in the area but that is not so. Granted there are no new homes on more than 1/4 acre in the area but that should be a plus for me, especially since they are all selling for more than mine was appraised for. All the 5 acre homes that have sold in the last year are 15-40 years old and all but one is smaller (they included any guest houses / attached buldings in their size but they excluded our MIL Suite in the size calculation of our home).


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## texican (Oct 4, 2003)

I have no golden solutions for you...

Like Steve said, it looks like you've been dragged against your will into the downward spiraling market.

Have you talked with the bank? I've read where some are willing to work with people, instead of being stuck with white elephants.

I'd probably try and do the second mortgage, on the difference between the appraised value, and the actual cost. Better that, than to lose it all, a year of your time, and your good credit rating.

Good luck... sounds like luck is going to be needed...


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## Dutchie (Mar 14, 2003)

SteveD(TX) said:


> Appraisals reflect the value opinion of the appraiser as of the date of the appraisal. Not one day later, not 6 months later. Rumor has it that property values in many markets are going down at record rates. Florida included. You apparently got caught up in it. I'm not saying both appraisals are absolutely foolproof. Appraisers don't walk on water, no matter what people tell you. I would get the second report (the first one too, for that matter) reviewed by a third, very experienced local appraiser not connected to the deal. See if he just "missed it". Or if he missed pertinent sales data that led to a faulty estimate of value.
> 
> That's a huge loan. Is there anything that you can put up as additional collateral to secure the loan? What is the permanent lender suggesting?
> 
> Bottom line - don't shoot the messenger here. You may be just a victim of the local real estate slump.


Ditto.

There is much mis-information in many of the posts in this thread:

1. A sale is not necessarily a comparable
2. Replacement cost/value and market value are 2 completely seperate things
3. The appraiser not discussing it with you has to do with the fact that he/she is prohibited by law to do so
4. Comparing new construction with older homes is sometimes the only thing that can be done, especially if there are no newer re-sales or sales from competing builders in the area. Age and amenities can be adjusted for.


Etc, etc etc.

If you want to have an independent appraiser look at both reports free of charge, please pm me. I can help you arrange for that.


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## willow_girl (Dec 7, 2002)

Find a different appraiser!

I had to have 2 out when I bought my current farm. The first valued it at $25,000, the second at $50,000! 

Of course, both had comps, etc., to explain their conclusion. But as you can see, it's VERY subjective!


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## Dutchie (Mar 14, 2003)

Willow, it shouldn't THAT subjective. I can see a 5%-10% variance, but 100% is too much. One of the appraisals was wrong.

The OP needs to find a COMPETENT appraiser. He could find an appraiser that comes in as high as he likes to, but chances are that it won't pass review.


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## BobDFL (Jul 7, 2006)

Thanks y'all. 

Well I did some checking around with some real estate people I know and low and behold we were able to find 10 sales in the area with 5+ acres and houses that sold in the last 6 months. Of those only 4 were non-foreclosurers which (foreclosurers should ot be used for appraisals). Those 4 ran from $590,000 - $775,000, with the highest priced one being the most comparable to our house (size, material, and extras). 

So now I'm shopping for a new appraiser, but since a finance company won't use an appraisal I get I have to find the appraiser then find the finance companies they use.

Meanwhile, we've contacted the bank that is holding the construction loan and explained the situation to them. Their comment was, that if they did permanent moortgages they would have converted us in a minute, but they got out of the business about 6 months ago, and sold off all the mortgage holding. But they agreed to extend the construction loan 3 months (for $3,000) so that we can keep looking for financing. The original broker can no longer do business out of state (they are in Texas) due to new rules set down by the State of Texas, so they refered us to a couple of national companies to check with.

We still haven't heard back from the original company on their questioning of the original appraisal, but another firm said they had verbal appraisals from their people that ranged from $575,000 - $625,000, which was still way above the original appraiser.

So the drama goes on,


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## BobDFL (Jul 7, 2006)

Well it took some time and I had to do a lot of their work (my financial company said I should get my Appraisers license since I was doing all the work for them), but we have finally gotten what we and our financial company feels is an accurate appraisal.

It actually came from a company that did the first appraisal a year ago, then they came back with a low ball number, then after I sent them a dozen comps that I found on the Property Appraiser's website, they have re-evaluated their appraisal and are now looking at between $600,000 and $650,000. If it comes in at the higher number I'll be able to do away with the mortgage insurance :banana02: . 

I guess what the kicker was, that of the comps, I had 3 over the course of the last 10 months (it's hard to find comps because there is very little acreage left in this area), with sales prices of $681,000 in 08/2007, $750,000 in 11/2007, and $765,000 in 02/2008 (all with 2-5 acres, ours is 5+ acres). Which to my untrained eye shows increasing values of acreage homes over the last 10 months, not the decline that everyone keeps saying.

So I guess my take on this whole thing is that you need to shop around for an appraiser that same as you do for a mortgage, and be prepared to do their work for them.


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## Guest (May 22, 2008)

I'm glad that you got that straightened out, I was reading this thread and on the verge of posting my own 2c worth. Which woulda been: half a million dollars of debt, I'd be waking up from the American dream, packing my stuff, and be gone in a flash.


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## Macybaby (Jun 16, 2006)

We are looking at getting an appraisal done just to dump the mortgage insurance. We got an equity line for major remodeling, and the house came in at $160,000. We owe $106,000 but the bank said they would not use that one for the main mortgage (we are talking the same bank for both loans . . .)

Now our neighbors have thier place for sale. They have 24 acres, we have 40. They have done minor fixes, we've gutting and rewired, replumbed and reinsulated the entire home. We have more outbuildings and better fencing. Houses are about the same size and both have all new windows and shingles.

They are asking $185,000, and we are hoping they get it! Right now we are holding off on the second appraisal, figure if this house sells, it would really help to get our value a bit higher.

Cathy


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## BobDFL (Jul 7, 2006)

zong, I know it's alot but not for here in Central FL.. 

Houses in subdivisions with 1/4 acre or less sell for $400,000 - $1,500,000 around here. But I guess thats what you get when your less than 2 hours in either direction from the beach (the Atlantic and the Gulf of Mexico) and only 30 minutes from Walt Disney World.


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## AngieM2 (May 10, 2002)

Bob - sounds as if you are paying for a whole lot of location, location, location. I hope it works out as you need it to.

Angie


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## BobDFL (Jul 7, 2006)

Angie, your right. A lot of that is because of my job. Even though I get to telecommute I need to be able to get into downtown Orlando (40 miles away) within a hour of being called (I work for the court system and judges don't like to be kept waiting). I also needed an area that got High Speed Internet for my job (we found cheaper places but they didn't have access to broadband, and I can't use satellite internet because of how I connect to the offices network, so it was DSL or Cable only).

Also my DW and I have lived in this county for the last 20+ years and are deeply involved with 4-H (my DW is a club leader, both DDs are in 4-H and one is also in FFA) and other organizations in the county (member of the organization that runs the annual County Fair, and volunteers for the Extension Services). Also the high school is the only one that we know of that offers veterinary assisting and animal husbandry as a major, which is the career path my DD wants to follow. 

That is why we didn't move farther out to get cheaper prices back in 2005, now with $4 gas it is actually cheaper in some ways.


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