Appraisals gone bad!

[Kyle McCorkel]

I am in the "refinance" stage of two BRRRR projects and both appraisals came in very low. We are talking $30K+ low. Major, major setback! So I'm looking for advice on moving forward and also what can be done differently in the future.

Both are SFR's through the same lender. One is Indianapolis (light rehab), the other is in Philadelphia (gut job rehab, all new mechanicals, floors, plumbing electric, kitchen, everything).

I have many thoughts and questions (and I can provide more details if needed), but in the interest of staying succinct:

• I've been told to try a different lender.  How does a lender influence appraisals? I always thought appraisers were independent from lenders.
• It seems that a big influence on the appraisal was the "condition" rating of the property.  This seems very subjective.  For one property the condition was rated "C4" and all the comps looked like distressed sales (for the record, the subject property is rehabbed, not distressed!) The "C3" rated comps are literally $100K higher.  What are the best ways to influence an appraiser's condition rating of your property?
• Another issue is the appraisers are using the previous (distressed) sale of the subject property as a comp.  This doesn't seem legit at all.  I submitted a "rebuttal" on this point and the appraiser didn't respond to this point and didn't adjust the appraisal at all.
• How important is it to have a renter in the property? One property had a renter in place and the other is still vacant as the renter hasn't moved in yet.
• Bottom line is: what is the best way to point the appraisal in the right direction? The appraiser has comps all over the place, between $50K and $250K depending on the block and condition.  I feel like for a refinance, the appraiser looks at the previous sale of the subject property and finds comps to justify that number, causing them to come in conservatively extremely low.  For a conventional purchase loan, the appraiser can see the sale price of the property and naturally usually comes in close to that number (surprise, surprise!) (Side note: as an engineer, I might call this "cooking the books" or "backing into a number") So again, to restate the question: for a refinance, how do you point them in the right direction?