How to value in market with huge price swings

[Joseph Walsh]

Hi all, I am looking to refinance a possibly under-water property.  I say possibly because the particular neighborhood has some pretty wild price swings on seemingly comparable houses (I mean swings of 100% ore more!).  Much had to do with a rash of established owner deaths, compounded by foreclosures piling on the "low" end, but more "normal" sales at the higher end the past year, most recent listing are right where I hope to be.  Is there any way to affect the appraisal process, or is this a "luck of the draw" type scenario.  Is it possible to seek out lenders known to be "generous", or would a broker be better?  Or, am I just gambling with the appraisal fee and hoping for the best?  My first step is going to be to ask my realtor....any other thoughts?  The refi is a veritable must.  Right now it's a loss property and just "fixing" the rate would be profit. 

I'l' be doing the obvious of making sure the house shows well.

Thanks, 

Jay

[James Masotti]

Originally posted by @Joseph Walsh:

Hi all, I am looking to refinance a possibly under-water property.  I say possibly because the particular neighborhood has some pretty wild price swings on seemingly comparable houses (I mean swings of 100% ore more!).  Much had to do with a rash of established owner deaths, compounded by foreclosures piling on the "low" end, but more "normal" sales at the higher end the past year, most recent listing are right where I hope to be.  Is there any way to affect the appraisal process, or is this a "luck of the draw" type scenario.  Is it possible to seek out lenders known to be "generous", or would a broker be better?  Or, am I just gambling with the appraisal fee and hoping for the best?  My first step is going to be to ask my realtor....any other thoughts?  The refi is a veritable must.  Right now it's a loss property and just "fixing" the rate would be profit. 

I'l' be doing the obvious of making sure the house shows well.

Thanks, 

Jay

 Have you recently done renovations to the property? Your best option is to do a boat load of market research to demonstrate that the health of the surrounding neighborhoods and community is still strong. Then you need to pull together the bad comps the appraiser is going to find and explain why they are bad comps. Then you need to pull together the high end comps. Then you need to make your justification for what comps are most accurate for your property. Just because you want the appraisal to be the high end doesn't mean it is. So how do you influence the appraiser? From the very start of the process. Show them before and after pictures. Give them the scope of work for all the rehab work you've done. It's never a guaranteed thing with appraisers but that's how you put your best foot forward. 

[Joseph Walsh]

Thanks, and that's a good thought on grouping the "bad comps" as to being ones that should be tossed ahead of time.  And yes, if it's worth less than I hope for, so be it. 

Jay