How do appraisals on a home work, especially ones used to finance a home?

Question

I feel that the appraisal on my home may have been fraudulent and improper because the "comps" used to get an estimated value of my home were highly over-inflated homes that were different than my home on several very key points. What is a fair way to appraise a home? Should not a home that lacks a permanent foundation be compared to other homes that also lack this? Or what about appraisals where each "comp" has a 100% increase in sales prices from just two years earlier. We aren't talking suburbia here, but the rural midwest in an area with very minimal population growth?

If I find the appraisal is in such error, what is my recourse?


Thank you,


Racer X

Answer 1

I am an appraiser and from my point of view here is a few pointers. If you know of any sales that occurred in your area I would let him/her know about them; the appraiser may not be completely familiar with your area and might have missed a few sales (they should not have missed too many one or two max). Another thing you could do is ask for another appraisal be completed by your lender's appraiser; using your own will not be valid by your lender. As far as comps are concerned you stated that you are in a rural area where not too many things are happening. In a case like this you would have to use older sales, sales further away in distance because of the lack of sales. As far as usings same type of foundations the appraiser would be making adjustments for lack of or adequate foundation. If your neighbor sold his house yesterday and he had a full basement; you wanted to sell yours but you don't have a basement is your house not comparable because of the basement? Of course it is ; what gives a better indication of what someone would pay than a neighbor next door. Also, with a the appraisers adjustments it can greatly increase or decrease a property's value;land sizes, square footage, location, amenities, condition, and time.

Answer 2

The appraisal done by or for the lender is only to establish that the house is worth what they are lending on it.
Ex; Your house is selling for $300K and they buyer is putting down $200K then borrowing the other $100K the the bank only wants tro see an appraisal of $100K. The appraiser will stop once they have established $100K of value.
DO NOT confuse a loan appraisal with Tax assessment appraisal or true market value. All are different amounts for different reasons. Relax.

Answer 3

Firstly never get one appraisal. two is appropriate.
Never tell the other who and what,

If you feel that there has been some discrepancy, get another
person around to do the appraisal again. This time have a witness with you a business associate or a friend that's in real estate.
However having said that, and there has been an error, I would seriously have a lawyer friend ( if you have one) look into the proper channels, of what can be done.