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Appraisal issues, even in LAND PARK! Or was it the appraiser's lack of knowledge and homework?

By
Real Estate Agent with Lyon Real Estate

So this is my 1st time posting here, do bare with me......

Being involved in a Land Park sale has always, for the most part, been pleasant! Until.....yes Elizabeth, you guessed it, the infamous McClatchy Way house (again!). This cute lil home sold in Feb 08 for $285k. It appraised for $300k at the time. Whew, done, closed, everyone's happy......wait, no!!!!!! A year later I get a call from my clients, "Dan, job xfer, we have to sell, do you think we can sell and break even?". *gasp* Hmmmm, doubt it, but we'll try!

After starting at $305k, no action, then reducing to $299k, another Lyon agent brings her buyers to the table......$290k with $7500 in concessions. My seller's realize it is what it is, and money out of pocket to close is a MUST. Ok, moving forward......appraisal......I should of knew what was to come when the appraiser calls me and says "Dan this is the appraiser for McClatchy Way, I see here that it already closed as of Feb 14th (he called me on about the 19th), ohhh, oops, sorry Dan, I now see it was in 2008". LOL

Appraisal comes in a few days later, $270k. WHAT!!??! Now, I know the market has come down, even a tad in Land Park, but I didn't think $270k. No way is my seller going to write a check for $40k "ish". No way. Not only did the appraiser use awful comp's, he stated in his report that this area "has a high concentration of REO's", and also used the zip code 95843.

Get on the line with the lender, and explain that there's just no way...even $280k would have been better. She orders a 2nd appraisal, as she noted that they've been having some issues with this FHA appraiser.

2nd appraisal.....$290k, right at contract price! Yay! By now though, the buyers do not want to pay this amount, so we renegotiate and meet in the middle....sellers aren't happy, but realize we dont have many options! All is well...waiting on doc's a week ago......no docs....no docs....what is going on we ask??? Finally, let the truth be told, the lender states "under FHA guidelines (or something to this effect), the higher of 2 appraisals cannot be used! the 2nd can be used to "aid" the 1st appraiser if the price needs to be bumped up, but that's it.

Long story short, we finally got the 1st appraiser to "bump" his original appraisal to $274,500, the lender is crediting the $7500 in closing costs. Buyer makes out with a lesser amount, seller ends up still paying out of pocket to bank to satisfy loan.

In the past week, I have heard several other agents mention they've been dealing with the same......I understand that appraisers these days are under the microscope, that's fine, we get it, but at the same time, it seems many appraisers do not do all of their homework to understand current market conditions, especially in what are considered to be "bubble market" areas.