Thursday, March 28, 2013 - Article by: William J. Acres - RPM Mortgage Inc. -
I have seen this question quite a bit here lately, and although every scenario is different, there are some key things to consider when you go about contesting the appraiser's opinion of value for your home.
First let me say that most home owners in general always feel their homes are worth more. Emotions, always get your head cloudy when it comes to your personal property.. An appraiser on the other hand, is just looking at the numbers.. Strictly the numbers.. No emotions involved at all.. so keep this in mind when you go about disputing the value.. also keep in mind that that an appraisal is an experts "Opinion of Value"...Also understand that there's a lot of education and work experience necessary to become an appraiser.. in most cases he has 150 Hours of initial education, has to continually take educational classes each year, worked as an apprentice for another appraiser for a minimum of 2 years, 2000 hours, and that's if he's straight out of appraiser school. Even a newbie fresh out of school is 100 times more qualified to do an appraisal then you or I.. Also note the appraiser has access to multiple sources to help find the most recently sold comparables.. Sources you and I don't have access to.. Rarely if ever will an appraiser change his value, especially these days when the housing crisis was partially blamed on the appraisers. So you really have your work cut out for you when you go against him to dispute your value..
This all being said, appraisers are humans, and humans make mistakes... and we have seen where appraisers have missed the mark, so it does happen, but not often... For the lender, new laws prevent him from communicating with the appraiser directly. All appraisals are ordered through a 3rd party to discourage any outside influence in valuing the property. The steps you take to dispute the appraisal varies depending on the loan product you are using for financing. VA loans for example have a process called "Tidewater Initiative".. Here's the wording straight out of VA's Appraiser Handbook...
5.3 Tidewater Initiative
The Tidewater procedure allows an opportunity for a designated "Point of Contact" (POC)
(typically the POC shown on the VA Form 1805) to provide market evidence for the
appraiser's consideration prior to establishing the final URAR value.
The appraiser initiates the procedure by alerting the contact person that the appraised
value appears to come in under the sales price. The appraiser should not discuss the
appraisal contents except to explain that the comparable sales located by the appraiser do
not adequately support the sales price. The contact person then has two business days to
provide additional sales information in support of the sales price. Verification of all closed
sales is required (pending sales may be offered, but can only be used as additional support).
All attempts to communicate with the designated Point of Contact must be documented in
the appraisal report to show the date of the attempt, the party's name and phone number,
and whether or not additional information was provided.
To dispute FHA or conventional financing, it's called a rebuttal, and there's a specific form that needs to be filled out.. With a rebuttal, the appraiser may reconsider the value of an appraised property if the lender determines sufficient evidence exists to support a higher value. A terrible appraisal does not automatically qualify for the reconsideration process. The request must contain photos of comparable properties that the appraiser may have overlooked, which were available at the time of inspection. For example, a home that sold after the appraisal may not be used as a comparable property in the reconsideration process; but a sale that occurred before the inspection that was not published or readily available to the appraiser may be considered. Keep in mind that you really have to have your ducks in a row if you're going to be successful in getting your value changed...
I've been in the real estate/ mortgage business for 25 years, and I can count on one hand how many times I've seen an appraiser change his value... so you have a tough road ahead of you, but if you really feel your appraiser missed the mark, there are processes in place to convince him otherwise.
I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com
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