Low appraisal for mortgage refinance

September 24, 2016 11:17 AM

We are trying to refinance our mortgage, and the appraisal came back low. Now our loan to value ratio is lower than expected, and the closing fees are higher. We don't feel like the appraiser did his job correctly (more inside for details). We are pretty sure a second appraisal would come back much higher, but the cost of the appraisal is about the same as the increase in fees. What should we do? Have you successfully contested an appraisal (is such a thing possible)? If not, can we use this low appraisal to request a lower assessment on our property taxes?

We own a 4BR in a pretty low inventory area. Our house is kind of an anomaly. There are a bunch of 3 BRin our neighborhood with similar square footage and total number of rooms. Those all sold for much higher than the comps the appraiser used. The appraiser explicitly said in his report that he didn't look at 3 BRs for comps. Instead he used a 5BR and a couple of 4BRs that are all falling apart and in worse neighborhoods a few miles away. The initial appraisal when we bought 3 years ago was higher, and used similar 3 BR comps in the neighborhood. I tried to review those problems with our loan dude, but (understandably) he brushed me off.

I know this sounds like I'm just trying to save a bit of cash. I know appraisers are professionals and are supposed to know the real estate market better than homeowners. For the sake of the question, please assume that this really was a bad appraisal and doesn't accurately reflect the value of our home. Thanks!

posted by one_bean to Work & Money (4 answers total)

The loan company wants your business, right? See if you can talk to someone else at the same lender, the loan officer's supervisor or someone higher up. Let them know that you won't refinance according to the terms of the current appraisal. See if they budge.
posted by mai at 11:57 AM on September 24, 2016

We just did this and were told that we could challenge the appraisal if we thought the comps were iffy. Good luck!
posted by chesty_a_arthur at 2:21 PM on September 24, 2016

Best answer: In a similar situation I successfully contested an appraisal by submitting an analysis that boiled down to essentially re-writing it--that is, using the author's style and logic patterns, only using the comps I felt were better comparisons instead and devoting a section to explaining why the seeming-reasonable-at-first-blush batch were actually inaccurate. I also included a section on how values had changed in the neighborhood and region over the time period. I dealt with the appraiser directly, with a professional demeanor while also leaving no doubt that I would go over his head if necessary. The loan officer doesn't care; deal with the appraisal firm or department.
posted by carmicha at 2:29 PM on September 24, 2016

Response by poster: E-mailed the appraiser and asked what was up. He admitted he hadn't looked for any 3 BRs (wtf), I suggested two better comps, and he agreed. I then had to ask my mortgage dude to ask the appraisal company to change the document. Waiting on final results, but having the appraiser on my side seemed to do the trick. Thanks!
posted by one_bean at 7:31 PM on September 27, 2016