Yes, you read that right. I was turned down on a recent refi because the appraisal came back too high. I never imagined that I'd see the day when that happened, but maybe it's an effect of a mortgage industry running scared amidst accusations of fraud. Personally, I'm more than a little bit upset over the whole deal.
You see, last year I ran across a property that had some great potential. It was a foreclosure 2BR/1BA raised ranch with a full concrete basement and a 1 car garage, situated on 1/3 of an acre. It was a small house, smaller than my normal investors' requirements of 1300SF and it was a 2BR property, so it didn't fit for my investor clients and none of them wanted to make a move on it. I still thought it had some potential, so I kept an eye on it. I knew it didn't fit the profile of most investors, so it was a safe bet to wait it out for a while and it was on the market for only $24,900 after all.
A couple of months later, as we neared the end of the year, the price took a steep cut to $17500, so I made an offer of $15000. I guess someone else was watching it too, because I ended up in a bidding war. I finally ended up making a full price offer and the house was mine. This purchase didn't come without risks. The house was a foreclosure and had been vacant for over a year. I had no idea what worked and what didn't, so started turning utilities on and checking things out.
It turned out that the systems were in fine working order, actually much better than I could have hoped for. Not a leak in the house. The furnace and water heater were in great shape. The electrical was upgraded and the windows all worked as well. I was as happy as I could be with my purchase. After changing the flooring out and painting, I put some appliances in and was ready to rent.
It didn't take long to find a tenant and I had all the pieces of the puzzle complete. I was content with my purchase and went about my business. This year, my wife and I saw another house we liked and decided to cash out the value in our investment property in order to use that money to buy this property. We made application through a mortgage broker in our area who had worked well for my clients in the recent past.
Things were going well until we got to the appraisal. It seems that my property is worth too much money now. My appraisal came back at $39000, which thrilled me when I got it back. It would be enough to pay back my investment and give me enough cash to buy the property I wanted. Then the bank sent it back to the appraiser. The value was too high, they said. Find cheaper comps, bring the price down.
The appraiser pushed back. Those were the best comps and the value was good. The bank pushed back. Redo it so you can reflect a cheaper value or they wouldn't accept it. The appraiser refused to change it yet again. The bank, true to their word, dropped me like a hot rock. It seems that my property is worth too much for the bank to refi. So...here I am, with my over-valued investment property that I can't get refinanced because my appraisal came back too high. Maybe I should have tried to influence the appraiser to fudge on the numbers to bring the price down? Hey, Mr Appraiser, I need that value to come in lower...think you can hook me up? I don't think I'll be having a conversation like that with an appraiser any time...ever!
I got a letter from the bank. It says I have been denied credit due to an "Unacceptable Appraisal". It's laughable really. I mean, I paid for an appraisal. The appraisal was done. The bank didn't like it. Now, I'm back to square one. Well, I guess that's not altogether true. I do have this nifty appraisal that the bank won't accept. Maybe I should get a nice frame.
Until next time...
My name is Andrew Trevino. I am a Realtor, working in the Wilkes-Barre, PA area, and I'm affiliated with TradeMark Realtors Group. Thanks for investing your time in reading my blog. If you're interested in contacting me, please visit my website at http://www.wilkesbarrehomesales.com/