Home Appraisal Disagreement

[Jake Tilleson]

I had a property appraised in April of 2020 and then again in January 2021 to refinance. Between the two I converted the back half of the attached 4 car garage to a livable rec room/addition (approx 500 sq/ft) and had the exterior of the house re-painted/landscaped. The new appraisal valued the home $10,000 less than the appraisal in April of 2020. Based off appreciation/market alone without any improvements the house should increase in value ~2%. 

I am looking for advise on what investors do when they do not agree with the appraisal of a property. Do banks re-adjust appraisals with additional comps/info provided to them, pay for a second appraisal? 

Thanks, 

Jake

 

[Patrick Britton]

@Jake Tilleson  Here's a possibility:  the removal or reduction of an attached 4-car garage reduced the value significantly more than the additional 500 square feet of extra space.  how to test this idea?  Are large garages common for properties in your vicinity?  If all the comps have larger garages, and yours in now smaller, than will impact value significantly. 

Here's another possibility:  for refinances appraisers are trained to be more careful with valuing "improvements."  In other words, they are careful not to overvalue work done to a property.

And here's one more:  refinances don't have a "contract price" associated with them.  So unless the appraiser gets a sense of what others (including realtors) think a property is worth, they will be extra cautious and likely undervalue 

Lastly, no two appraisals will result in the same value.  Unfortunately, appraisers aren't trained the same which means that appraisers will consistently end up with different results, despite the fact that they are all looking at the exact same data.  

You can file a complaint with your state's regulatory body (for negligence and incompetence) but if you're going to dispute the value you'll need to present facts and supporting evidence that even the strictest appraiser couldnt argue with.