Do I dispute a bad appraisal or get another?

November 6, 2009 8:57 AM

[RefiFilter]: I'm applying for a re-fi on my condo, and just got a HORRIBLE appraisal. Like, so horrible the mortgage broker AND the underwriter of the loan both are scratching their heads. Short question: do I dispute, or suck it up and blow another $500 in hopes of getting a more realistic appraisal?

The appraiser used comparables with no apparent relation to my place (i.e. mine was a rebuild in 1984 on a 1904 foundation, he compared it to buildings built in the 20s and 30s), comparable sales in my neighborhood in the past 3 months have all been FAR over what he appraised mine at, I have outdoor space that almost no condos around me do, he got the # of floors in the building wrong, etc etc.

I know I can't pick an appraiser because of government regulations now, but I don't know if it's best to dispute THIS one, or just start over and request a whole new appraisal (and start new re-fi paperwork also).

I do know that homeowners typically overvalue their own property, but when a BANK and a broker both think the number is ridiculous, I feel I have some solid footing.

Any experience with this? Do appraisal disputes *ever* work, or would it be a waste of time? Did you prevail in a dispute, or spend more $ and pray for the best?

(If it helps I'm on Capitol Hill in Seattle near Seattle U)

posted by tristeza to work & money (5 answers total)

Can you just ask the appraiser questions on his choices?

You have some conflicts in your personal condo assessment, such as comparing it to sales in the neighborhood while stating that your condo has unique characteristics that's not found in your neighborhood. So maybe there's something you're missing?

Then again, coming from a friend who used to be an appraiser (in Seattle), they just make this stuff up anyway.
posted by razdrez at 9:30 AM on November 6, 2009

I would present him with the comps. I would dispute this one if it is clearly off. People make mistakes and if he has data to support a change he should be willing to change. He will need hard data and detailed reasons for changing his appraisal. You can always restart the paperwork and get another appraisal if it does not work.
posted by JohnnyGunn at 9:30 AM on November 6, 2009

You shouldn't have to pay. Dispute the appraisal with very detailed examples of how they got it wrong, and request that they do it over. Back up your case with as much ammo as you can -- photos of places that you consider to be more accurate comps compared to photos of the places that they used, sales records from the county, data on the surrounding area from Zillow, actual photos and details that explain why they used the wrong houses for comps.

They will ask you to pay for it. Your answer is no, I'm not going to pay for your mistake. Tell them that if they do a new appraisal and it come in the same as the old one which you consider to be in error, then and only then will you will pay for the new appraisal. This is OK, because if it turns out that they are right and you are wrong, it is only fair that you put your money where your mouth is.

I did this exact same thing earlier this year, and I did prevail. However, it was not easy. I started by submitting a very detailed 11 page manifesto to back up my claim that their appraisal was simply wrong. It took a lot of work on my part, and a lot of patience while they worked through the process. But in the end, I won, and it was worth it.
posted by spilon at 9:37 AM on November 6, 2009 [1 favorite]

Generally, if the bank you're trying to close the refinance with and the broker both agree the appraisal is amiss, then it's worth the fight. Everyone wants the loan to close; no one wins with a low appraisal (wasted time, wasted money).

As stated above, make sure your evidence is clear, compelling, and to the point. Pictures help. Public records help. Give all interested parties material to work with, and they will help you close your loan.

If things don't work out, and you are comfortable shelling out some more cash, re-start the process with a local bank that is going to use local appraisers who know the area better. Having worked in the industry, I know that appraisals can vary wildly based on the appraiser (it seems unfair, but it's true), and you might be pleasantly surprised by another one. Good luck.
posted by st starseed at 7:32 AM on November 8, 2009

Thanks fo all the input, dudes - I've been unable to deal with this crap and have been letting my mortgage broker figure it out....but have not heard and am getting antsy. Sigh. Great advice, tho, if I ever get it together!!!
posted by tristeza at 3:31 PM on November 17, 2009