You Can Contest an Appraisal - And WIN, Part 2

By
Real Estate Agent with Henderson, Thornton, Broomfield and Westminster 100026886
https://activerain.com/droplet/4Bvr

You Can Contest an Appraisal - And WIN, Part 2
The 2nd of 2 Parts

In Part 1 of this post, I gave you some of the background.  In a nutshell, the buyers and sellers were in agreement on a price that the appraiser then said was too high.  And the sellers weren't going to budge.  And the buyers couldn't bring any more cash to the deal....

Of course the loan officer didn't see a problem with it.  He felt like the sellers should just drop the price.  No bigs!  Yeah.... not to him.  But it was plenty big to the sellers.  And the buyers, for that matter.

After consulting with some of the mortgage guys that I prefer to use, I was told that it was an uphill battle at best.  2013 has been all about uphill battles for me, so I was undeterred.  And now I was armed with some terminology and a very basic idea of how to proceed.

First, I called the buyer's loan officer to "formally" report that I would be contesting the appraisal.  "Don't do that," he 'encouraged' me.  "It never works... Or if it does, it has to be a very special circumstance... In fact, the appraiser won't do it because you are calling his expertise and professionalism into question.  Just have the sellers suck it up and drop their price."  Uh, no.  

I then became a robot.  "I am asking you to send over whatever paperwork you need to send to get this formally started."  I say "robot" because I must've repeated this phrase 4 times, each time with less emotion.  This phrase was interspersed with his arguments for why I should just drop it, each time more heated and emotional.  I followed up on the spoken request with an emailed request.

I then phoned the appraiser.  He could not have been more professional or more helpful. Or more enlightening.  After speaking with him, I knew that I'd have a difficult battle, but I had hope.  "If you can find a property that has sold for the same or more in the past 6 months within a 2 mile radius, that will support the price.  Usually we want the comps in the same neighborhood, or at least within a 1 mile radius, but this is a slightly unusual place.  I'm happy to reconsider it.  I may have missed something - I'm human."  

Interestingly, he also told me something about this particular lender and their underwriters.  Apparently, this group has a "rule" of sorts.... They will not underwrite any loan that is at the top of its market.  They need to have something that is a like-property that has sold for a higher price.  I was nonplussed.  "Wait a second," I sputtered, "if you must have something that has sold for higher in order to justify the price, how is the market ever supposed to appreciate??"

He agreed with me completely.  But that is how this particular underwriter does it. 

I went to work finding some comps.  And, lo and behold, I found one.  One.  It was enough.

I sent it on to the appraiser and he agreed.  He was going to re-evaluate!  Except.  Except, he needed the formal Request for Reconsideration of Value to come through the proper channels - the lender - so that he could do the report.   He hadn't received anything of the sort from them.  

Again, I worked the phones.  I called the loan officer.  I called his boss.  I called the newspapers.  (ok, not really on that last one...)  It nearly took an act of Congress, but we got it done.

The moral of the story.  

The lender was assuming that I was going to get frustrated and go away.  He used every stall tactic in his arsenal - including not submitting the request when I asked multiple times.  He sweet talked, bullied, cajoled and passed the buck.  He even encouraged the buyers to back out of the sale and find a different house.  What he wasn't counting on was the fact that the buyers actually wanted this house.  And this seller's agent was smarter and more determined than your average bear.

Don't give up.  Don't give in.  Keep your cool, and back yourself up with hard data.  It may not always work, but you will never know until you try.  Be nice to the appraiser.  It is also important to note that only the Seller's Agent can contact the appraiser.  If the buyer, their agent or the loan officer does so, it can backfire in a horrific way. 

You Can Contest an Appraisal.  And Win!

The house closed a week late, but at full asking price, by the way.

close

Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Praful Thakkar 07/07/2013 02:49 PM
  2. Joy Carter & Jeff Booker Brother and Sister Team 07/08/2013 11:45 AM
Topic:
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Rainmaker
247,962
Greg Cook
Platinum Home Mortgage - Temecula, CA
Mortgage Consultant NMLS ID# 283159

Congratulations Jennifer! AIR (Appraisal Independence Regulations) allow for a reconsideration of value, and the lender sould have advised you of the steps, not stonewall you.

All lenders are required to order appraisals through an AMC(Appraisal Management Company) and in a market with rapidly accelerating values it's the AMC that can be the deal maker or breaker. The big AMCs have hundreds of appraisers on their list, so you can get someone from out of your area with little to no local market knowledge. Other companies (like ours) allow for each branch to nominate a panel of local appraisers and appraisals are assigned randomly to just the members of the branch's panel.

I wonder how many agents, when interviewing lenders, ask about their AMC? If all real estate is local, shouldn't appraised values be determined by someone local?

Jul 08, 2013 07:12 AM #26
Rainmaker
198,796
Ben Yost - 303-587-4297
First Time Home Buyer, Mortgage Rates, Pre-Approval - Denver, CO
FHA, VA, Conventional - Mortgage Loans in De

Good Post Jennifer,

Bottom line is you lucked out!

99.9% of the time the appraisers don't reconsider, because it would be the same as a Realtor admitting that they had totally missed the listing price on the home and the sellers were totally right to begin with.

Have no Idea what you mean by the lender had had a "rule" of sorts- sounds like your new best friend the appraiser was just trying to CYA, so why not blame the Lender.

Bottom line the Appraiser missed the mark - not the Lender!

I always recommend that you ask for a reconsideration of the value- if it comes in to low. Why not? Can't hurt unless it holds up the closing.

Glad it worked for you!

Jul 08, 2013 07:20 AM #27
Rainer
497,665
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Interesting story, yet since you priced the property to sell,  didn't you already have recently sold homes that justified your listing price? Perhaps I missed or misunderstood some information. Regardless, your client was satisfied.

Jul 08, 2013 07:47 AM #28
Rainmaker
1,431,667
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Maybe the buyer should have gone to a new lender.  Of course you still have the appraisal to deal with.

Jul 08, 2013 07:56 AM #29
Rainmaker
161,921
Wendy Remley
Utah Prestige Real Estate - Syracuse, UT

What a happy ending!  I've fought appraisals, but never won. It can be incredibly frustrating.

Jul 08, 2013 08:07 AM #30
Rainer
116,518
Ric Mills
Keller Williams Southern Az - Tucson, AZ
Integrity, Honesty, and Vast Real Estate Knowledge

Great job, it takes a lot of gumption. You win some, it is tough but can be done.  I am one for about 5, but also go the extra mile to get it done. 

Jul 08, 2013 08:18 AM #31
Rainer
114,593
Richard Matus
Better Homes and Gardens - Mason McDuffie R.E. - Oakland, CA

I'm 3 for 3 in the last year with appraisal rebuttals. I've had good arguements for the lender to get a new appraisal (not just go back and ask the appraiser ro reconsider his work, that's not likely to happen). I find a major flaw in the report, write a huge letter explaining the flaw and get it back to the lender. Then I hammer on the lender until he/she gets the ball rolling on the rebuttal. Once I get the AMC to acknowledge the flaw in the appraisal report, they will send another appraiser out there to do another report, usually at their expense (that's what has happened in all 3 that I contested). All 3 of the 2nd appraisals came in at value. 

I probably put more time into my rebuttal letters than the appraisers did on their original report ( and that maybe is why the appraisals are so bad). but it needed to be done. All 3 of these bad appraisals were from "out of area" appraisers that flat out didn't know the marketplace, that frustrates me to no end. i've also found out that if an appraiser gets 2 or 3 rebuttals, they will get removed from the AMC's appraiser list. 

Jul 08, 2013 08:29 AM #32
Rainmaker
1,601,895
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Great story, gave you a break with the 2 miles, we only get 1. Great job for that seller.

Jul 08, 2013 09:37 AM #33
Rainmaker
686,859
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker
Good for you to make it happen even though it sounds like the lender was not going to be reasonable.
Jul 08, 2013 09:46 AM #34
Rainmaker
1,081,740
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

OK, Jennifer, you have chutzpah! A star of admiration for you! You also lucked out to get an appraiser who was willing to reconsider. Many will string you along and ignore you. I have heard about finding a flaw in the appraisal and demanding a new one and if there is a mistake, it's a very good idea to do that instead of arguing with the original guy. You can bet the next person they send will know the market well - they won't make that mistake twice!

Jul 08, 2013 09:58 AM #35
Ambassador
1,301,682
Dagny Eason
Dagny's Real Estate - Wilton, CT
Fairfield County CT, CDPE Homes For Sale and Condo

Great thought provoking post!   I will speak to the appraiser as a buyer's agent with no qualms.  I think if you treat them with respect, they will listen.   They have a job to do, as do we.

Jul 08, 2013 11:15 AM #36
Rainmaker
193,859
Joy Carter & Jeff Booker Brother and Sister Team
Keller Williams Parkland/Coral Springs Realty-GreatFloridaHomes Team - Coral Springs, FL
Trust Your Family's Move To Our Expertise!

You are the QUEEN of "GET ER DONE!!!"

MY HERO YOU ARE - With your "STICKTUITNESS".

Thank YOU for your Inspiration!  Joy

 

Jul 08, 2013 11:43 AM #37
Rainer
171,624
Jim Harper
Atlanta Communities Real Estate - Marietta, GA

Great story and great work Jennifer. I had heard it was possible to appeal, but not of a successful outcome. And no, all loan officers are not created equal. Jim

Jul 08, 2013 01:35 PM #38
Rainer
525,679
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Jennifer,

Lately, appraisers have been quite cautious in my view, but in the past, I have had success with this occasioanlly. Especially, if I found something the appraiser did not consider for some reason. We are all human and do not know everything, right?

Jul 08, 2013 01:40 PM #39
Rainmaker
1,068,262
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Congratulations, Jennifer!  Job well done!  This is a good lesson for all who read this post.

Jul 08, 2013 02:24 PM #40
Rainer
43,952
Carol Rutgers
Keller Williams Realty - Bluffton, SC
Quality service using technology for your benefit

Many appraisers do 5 or 6 homes in one day.  It is no wonder that sometimes they might be a little off the mark.  Great job on your part.  Persistence pays off and I am sure your clients appreciated it (at least they should have).  :-)

 

Jul 08, 2013 11:02 PM #41
Rainer
148,638
Arlene Garcia Hanner
SoCalAgency.com / Arlene Garcia Hanner, Broker - Downey, CA
SoCalAgency.com

You did a great job for your client and saved the transaction!

Thankfully, I do not have low appraisals too often.  Contesting appraisals is time consuming!  However, it has certainly been worth my time to contest as I eventually had a happy client in the end.

I have contested appraisals both as a sellers and as a buyers agent.

Jul 09, 2013 01:26 AM #42
Rainmaker
370,738
Travis "the SOLD man" Parker; Associate Broker
iXL Real Estate-Wiregrasss\ - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

Fortunately, most Appraisers and Agents in this area have a good, but ethical, working relationship. They don't mind extra comps, and even encourage them - as you's stated, they know they are "only human".

Jul 09, 2013 06:17 AM #43
Rainmaker
243,402
Dora Griffin
D A Griffin Financial.LLC - Fort Thomas, KY
NMLS 6380

Good for you. If you believe in what you have sold a home for and you know the area you are the perfect person to provide those comps.

There is some truth in that appraisers once they slap a value on something abhor backstepping at all. To do so, they would admit to being wrong. Add to that the fact most are not paid enough to do a good job and there you have it in most cases. 

It is a horrible system at the moment where buyers and home owners are NOT getting their money's worth. When it is merited we need agents like yourself who will take it on and provide those comps. Good job.

Jul 09, 2013 12:08 PM #44
Rainmaker
303,933
Michael J. O'Connor
Diamond Ridge Realty - Corona, CA
Eastvale - 951-847-4883

I had a similiar situation - with a twist.  The lender was the aunt of one of the buyers and she had a hair-you-know-where about the deal from day one.  When the appraisal came in low she thought it was finally 'done' and the buyers could go find a better house and deal somewhere else.

Wrong.  The buyers wanted THAT house and after I reviewed the appraisal I found a mistake (imagine that) which once corrected raised the appraised value by 5%.  Deal ultimately closed with tons of drama all the way through, but it did close.  :-)

Jul 16, 2013 03:44 AM #45
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Jennifer Prestwich

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