You Can Contest an Appraisal - And WIN 
The first of 2 parts
By now, you've heard it just about everywhere. The market has rebounded! Values are UP! We are in full recovery mode! Even the national news has jumped on the bandwagon and they're trumpeting the good news from the mountaintops of Rockefeller Center!!
What a refreshing change. Home sellers are putting signs in front of the house and many are getting offers within days, if not hours. Heck, some are even seeing multiple offers within a day or two. This should mean that home values are going to continue to go UP, right?
Maybe. Don't forget that in all of the buyer and seller frenzy, most buyers will need a loan to purchase a home. And when a bank is involved, you still need to have a little, tiny thing called an appraisal. That's the document that tells the lender/bank that this property is actually worth what the buyer is willing to pay for it.
Once upon a time, I was told by a professional appraiser that the best "comp" is a signed contract. (For those uninitiated with the terminology, a "comp" is a comparable property used as a comparison to the property being purchased.) This ties right in with the notion that a property is worth what someone will pay for it.
Seems simple.
Until. Until you get a bank involved. These days, many of those money stores are extremely gun shy. There's a lot of blame to go around when it comes to the banks having written loans that were ridiculously overvalued in the past - but that's not what this post is about. The banks are now being extremely careful about what their underwriters will fund, and the appraisers are at times being given very strict instructions about how to value a property.
Recently, I had a seller whose property was a bit unusual for its neighborhood. It wasn't a completely different animal, mind you, but it was one of the largest homes in the area and had a bonus space - an apartment above the garage.
A very willing and able buyer presented an offer that was just what the sellers were looking for. Hooray!
And then came the appraisal.
Bile rose in the back of my throat as I opened the attachment and viewed the value. It was $10,000 under the agreed upon price (which in this case represented a great chunk). Neither buyers nor sellers were ecstatic about this. Yes, the buyers would be getting a "bargain" if the sellers would come down. If. The sellers were not about to come down. The buyers would have lost the house.
The lender was mighty cavalier about it. "Just have the seller drop their price and we can close next week." Hold it, buster. No. Absolutely not. (I, obviously, represented the seller in this case)
And that's the point. You do not have to just roll over and accept it because the jackass mortgage broker says so! (Can you tell I was a little irked?) I put on my Seller's Agent Cape (once again) and sprang into action.
I was picking a fight that I don't think gets picked often. I first consulted with a couple of the mortgage guys that I prefer to use. How can we contest this? Does it ever actually work? Have you seen an appraiser change their value??
I was told that rarely does an appraiser change their report. I was told that maybe 1 out of several 100 gets adjusted. I was told I was fighting an uphill battle.
I said, "bring it on."
Next: How I Contested the Appraisal, and What Happened Next
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