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.