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15 Comments on Challenging VA Appraisals and Other Urban Legends
Nice post! We always know what we will get from the VA appraisors here in Vancouver WA. A low appraisal that will most likely blow the deal apart. When possible, we have saved deals by showing the buyer how using FHA lending will not only allow them to make the purchase but in most cases it will save them money on the loan. Unfortunately it has become such a huge problem that many of our vetrans are anable to use this valuable benefit.
Rich, I've only been doing this for 2 years, but my first VA loan last February came in $20,000 below contract price (I was representing the buyers in their new construction custom home). I called the appraiser, expecting him not to talk to me, but he went on a rant saying that it was his job to protect veterans from overpaying for a home. He actually ranted a bit about it. I was able to work out the deal, but it was TOUGH!!!
I've dealt with underappraisals in my area due to lack of comparable solds, but not VA appraisals. It's too bad, veterans should be able to take advantage of the VA mortgages. My parents paid $60 a month for the mortgage on the home I grew up in thanks to a VA loan, otherwise they never could have afforded a home.
Rich, VA Appraisals can be tough.
But just one little correction. It isn't the Lender's Appraiser that does the Appraisal on a VA Loan. The Lender submits a request for appraisal to VA and VA assigns the Appraisal. That is one of the reasons why VA Appraisers are tough to deal with some times, because the Lender does not have any control.
Very nice Rich.....my biggest problem is having alcoholic V.A. appraisers. I try to time the moods. If I do well...the appraisal does well.....if not....well....then...er...not so much!
We don't get many requests for VA loans around here. The few that have asked, ended up going with traditional financing. I've heard that VA loans can be quite a pain though.
Hmm, we must have good VA connections here in Kansas City; I've never had any trouble with the appraisers or the loans.
I'm going to knock on my wood desk as I type this, but I haven't had a VA appraisal come in low yet. Now there are appraisors who seem to overstep the guidelines when it comes to repairs, but the value hasn't come in low.
I wonder now if this is something else that is a local issue?
VA Appraisers typically have more experience. The two I know personaly are quite knowledgeable. The appraiser's goal is different from yours.
Appraisals don't "come in low."
Rick: Not always the case here. Some VA appraisers are good and know our market. Others are not so good. Regardless, the VA doesn't give them very specific guidelines when it comes to identifying potential safety hazards or calling out conditions that need to be remedied prior to closing. There is way too much subjective influence in their decision making process. The Request for Change of Value process is horribly flawed and needs more transparency. It's okay if the appraiser has different goals and interests than I do. I have no issue with that. Most of the time things go fairly smooth during the course of the transaction. It's just those occasional deals that go sideways where conditions have been called out that make no sense.
Curious as to your statement that appraisals don't come in low. Please do illuminate....
Without looking at a specific case, it's hard to make a lot of comments. I would probably focus on correcting any mistakes in the appraisal first. If the appraiser made a mistake, it should be pointed out.
I agree there is a level of subjectivity, especially in more rural areas, or in unique properties. An appraiser's opinion, however, comes from market information. And this is just one more reason to correct any mistakes, as that could have a domino effect to anything he or she might have grabbed from the market.
For example, if I suggested a home was worth $250,000 based on the fact that it had 1,000 sq. ft., but I came to find out later I overlooked a 300 sq. ft. addition, I might indeed find a higher value opinion after going back and researching higher sq. ft. homes.
When I first read your post, I saw a degree of venting (nothing wrong with that) in it. Maybe you didn't intend that and I just saw it through my own biases (as the guy on the other side). In either case, it's important to focus on the facts first.
Another example, I just delivered a report here in Georgetown for $75,000 less than the sales price. In fact, since the seller was selling at, or near, her purchase price from a few years ago, she now is not going to be able to sell without some sort of short sale arrangement, or a cash-in type deal. And of course, agents are looking at me like, "dude, we have a buyer; we have a seller; what's your problem?!"
And the problem is that buyer can't turn around and sell that home for what he wants to pay for it. I have no idea why he wants this home so much. There are three others the same size with the same appeal for less, 75k less, ahem, in walking distance.
Lastly, appraisals "coming in low." I need to write a blog on this. Before this summer, this will happen! In the mean time, chew on this football analogy:
An appraiser's job isn't to kick the football through the upgrights. His job is to kick the football, and where it lands, that's where it is supposed to land. In the case of that Georgetown deal I kicked the football in the complete opposite direction ... but that's where it was supposed to go.
My general comments about appraisers demand that the appraiser first did all the necessary research and was competent in the market area and smart enough to read the market. Take away one of those things and the table starts to wable.
Stay tuned for a blog called "Appraisals Don't 'Come In Low'" ....
Rick: Thanks for the detailed response. It's great to have your perspective here. We desperately need more appraisers to chime in and give us their viewpoint on such things.
In my last VA transaction, I was not allowed any access to the appraisal. That was a big part of the problem - not having enough disclosure to effectively evaluate the appraisal. All I could get was the 4 comps used to determine valuation. One of them was a bank-owned property, another was a hardship sale. I had a number of recent very similar properties that I provided to the lender in the required format. According to the Buyer's Loan Officer, the appraiser did not feel his findings warranted any consideration of my request. I was also unable to obtain any kind of documentation to verify that my Request for Change of Value had ever been sent or received by the appraiser.
An agent's primary responsibility is to represent his client's best interests. As a Listing Agent, the normal goal is to sell the home for the most money, in the least amount of time, without a lot of drama. I have always prided myself in marketing homes at or near current market value. That way you rarely experience any low appraisal issues.
No doubt there are some who kick the appraisal football very well and it ends up going exactly where it needs to be. But unfortunately, there are those who don't possess the necessary skill or technique, and end up kicking the ball out of play!
Yahoo! My first VA buyer (I am representing the seller), and I am dreading the appraisal process. My seller's have a stellar home in a neighborhood that has had MANY foreclosures. In fact, ALL the comparable homes that have sold in the last year were foreclosures. I am praying that the property appraises or that the buyer is willing to change his financing options!!
Now, I'm off to go read your other articles. :)
As a Mortgage Lender for the past 16 years here in Kitsap County I have done thousands of VA Loans. During that period of time I have noticed a pattern among certain V.A. appraisers. I keep meticulous records on everything. When valuations are not met it is almost always the same individual appraisers involved. It's to the point where if I see that I have been assigned one of these individuals, I alert the realtor's, and the home buyer, and start making contingency plans. Forget trying to challenge a VA appraisal as I have done so numerous times and the VA always takes the appraisers side.