House #5: Appraisal Time

April 6, 2009 · 12 comments

Okay, I must admit, I’m a little bit worried about the bank’s appraisal for the sale of The DIY House

The buyers are getting a VA loan, and the appraiser came out today. I met him at the house, and was hoping to walk away confident that the appraisal would come back well above where we needed it to be; to be honest, of all the houses we have done, this was to be — what I thought — was the easiest appraisal. The house is selling for $127,500, and I imagined the market value would be somewhere in the low- to mid-$140K’s.

Anyway, I met the appraiser at the house, and the first thing I said (with a smile) was, “So, we’re not going to have any issue hitting our number on this one, are we?” He just gave a little laugh that sounded to me as if he was saying, “Yeah, right. Good luck, buddy.”

After talking a bit more, I think he explained that he couldn’t use repairs/renovations in the house to impact the appraised value, which didn’t make any sense to me; generally, things like new cabinets, all new flooring, lighting, paint, etc, should increase the appraised value relative to the comps, at least according to previous appraisers I’ve worked with. Part of the issue I had was that the appraiser had had mouth cancer, and had part of his tongue and jaw removed. It was very difficult to understand what he was saying (at least at first), and I felt bad asking him to repeat things multiple times. So, I didn’t really get the details behind not using the renovations as part of the comp analysis. I’m not sure if I misunderstood, or whether that was something specific to do with the VA appraisal process or even something specific to how he did comps.

He then went on to tell me that he could only find two comps in the subdivision, and that he’d have to use foreclosures to make up the rest of the comps! And again, he alluded to the fact that I should be doing the very minimum in repairs, as they didn’t really help my appraisal. Ugh.

Anyway, he took measurements, strolled around the house taking a few notes, and then wrapped up. Didn’t take pictures, didn’t ask many questions, and didn’t spend very long at the house at all. He did spend long enough to tell me how screwed up the VA, HUD, and FHA rules were, and to reiterate that I needed to start doing much more minor rehabs if I wanted to hit my appraisal numbers.

When he left, I again asked if he thought we could make our number, and he again laughed under his breath. He said he’d be done with the appraisal tomorrow, and would call us “if there were any problems.” When I got home, I took a look on the MLS, and it’s true that there aren’t many comps in the past 12 months. If we could go back 14 months, there are a couple newer and bigger houses that sold for much more than ours, but I’m guessing he won’t go back that far, nor will he use these other houses as comps.

While I agree that there aren’t many comps for this house, it still surprises me that we may not hit our number, just given the 1-2 year sales and the condition of the house.

I’m curious if there’s any recourse to a low appraisal…can I ask for a do-over? Can I request another appraiser? Or am I stuck with this appraisal with this lender, and that’s all there is to it?

12 responses to “House #5: Appraisal Time”

  1. Ingrid says:

    In some ways I can understand what he is saying. We put new windows in our house in NY, to the tune of $10k (stupid tax), and when we went to sell, we called the appraiser who appraised when we refinanced to come out and do another appraisal. We had been told by others that the new windows would add value – between that and the $130k CMA that the realtor gave us, we thought we were in good shape. Turns out the appraiser said it was a no go – things like windows, new roof, new kitchen cabinets, etc., are considered “maintenance” to appraisers, apparently, so they don’t add value to the house. In the end, the appraiser came back with $115k..just as he did when he came out 8 months earlier…ended selling for $95k just to get the heck out and move on.

    It seems to me, though, that you did the minimum in repairs – not to take away from what you did, because you did an awesome job, but to me, you didn’t go nuts with expensive materials, etc. You brought the house up to livable, move-in condition. So in that respect, if he comes back with a low appraisal, it’s hogwash.

    I did a quick Google for low appraisals, and came up with this from

    I would probably opt for getting a second appraisal done, if need be.

  2. Ingrid says:

    I had a whole lengthy comment written out, hit the submit button, and it disappeared. So here is the short version:

    I would get a second appraisal, if possible. I think what he was trying to say was that updating the house is considered “maintenance” (new windows, new roof, that type of thing). That’s what an appraiser told me once. But I think your situation is different, because you were bringing the house up to livable, move-in standards. You didn’t over renovate, so I can’t see where you should be scaling back on your rehabs.

  3. Sam says:

    I recently had an appraiser tell me that he had to use reo and hud comps because he couldn’t find “retail” comps to use. I even provided a few comps for him, but he wouldn’t use them because the style of house wasn’t the same, even though sq footage, bedrooms and bath were comparative. It brought the app value down from 110k to 85k. Unbelievable that he used the trashed out hud property instead of my comps just because of the style wasn’t the same, but he did. And I had to pay for it.

  4. J Scott says:

    Thanks for the comments, guys…

    If the appraisal doesn’t come in where I need it to be, I’ll have to call the lender and find out what my options are. Hopefully they’ll let me do another appraisal, but who knows how that will work.

    I’ll keep you updated as soon as I hear!

  5. ezra says:

    How could renovations not count?!!! If they don’t count why does he even need to go into the house? He could just check the location and factor in square footage. That is if square footage counts.


  6. hakrjak says:

    I think this is just the guy you are dealing with. In 10 years I’ve had an appraiser tell me what you got told maybe once or twice…. There is this small minority of appraisers that feel it’s their civic duty to make all appraisals come out as low as possible and not to consider any repairs or rehabs…. 90%+ will consider repairs & rehabs into their mix.

    I had an FHA appraisal fail on one of my houses last year. I asked for a 2nd appraisal, which I guess they have to give you — if you ask… And the 2nd appraisal came out fine. I made sure to give the guy all the proof of the rehabs & upgrades I had done the 2nd time to make sure he considered them.


    – Hakrjak

  7. J Scott says:

    Ez –

    Oh nevermind…

    Hak –

    Thanks for the info…that’s great to know (that I can ask for a 2nd appraisal). I really couldn’t read this guy very well (for obvious reasons), so I have no idea what to expect for the appraisal today…

  8. hakrjak says:

    I’m with you though man — It creeps me out that I can invest so much time & money into a project, and my fate lies in the hands of some monkey with a god complex!

    – Hakrjak

  9. Bilgefisher says:

    I haven’t had much luck with appraisers. It is a very unprofessional industry to say the least. I have had appraisers stand in the house 5 seconds, walk out and come back the next day with the report. I feel your pain. I do believe a 2nd appraisal is out of pocket, but will be well worth it.

  10. Ingrid says:

    Well, what’s the verdict? You know I’ve been checking my Google reader to get an update. :)) ROFL

  11. J Scott says:

    Ingrid –

    Just saw your Apr 6 comment (stuck in spam filter). Thanks for the info!

    I know that VA appraisals are a bit different than FHA, HUD or conventional appraisals (for example, appraisers never speak with the broker, only the underwriter), so I’m not sure if that changes things.

    Thanks though!

  12. Ingrid says:

    Well, I glad you found it! LOL I thought somehow my computer messed up and I lost it on my end.

    I am completely embarrassed at the length of my original comment. No wonder it ended up in the spam filter.

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