Getting a fair appraisal in a non-disclosure state (Jackson, MS).

[Paul Winka]

Appraisal came in way low in zip code 39209, Jackson, MS.

Paid $90K in May 2019, at the time appraised for $95K. Getting refi now, the appraiser says it’s worth $70K.

There were multiple things wrong with the appraisal. 

AREA: Wrong square footage used, 17% less than actual. Easy enough to fix that...

USING OLD SALES DATA: Appraiser mentioned the last sale data was the one from the previous owner, not from my purchase. Trouble is, on sites like redfin, realtor.com, and zillow, the data from my purchase of the property is not there, but yet the county assessor has the correct ownership data. But the price paid is not showing on the assessor’s website. 

COMPS: Sales & rental comps were not very good, using properties that were visibly in worse shape, had carports instead of garages, rented for less than my property is now, etc.

According to the lender, only MLS sales data will be considered for assessing the property's current value. I talked to the seller, who is a turnkey provider; he can provide HUD1s for recent sales of similar properties and is willing to assist me. However, HUD1s from non-MLS sales will not be considered. I think this is wrong and non-MLS sales should be considered. If they don't work with me to assess the value with real sales data, seems like this would be grounds for a refund on the appraisal.

What more would you do to get a fair appraisal? What works with appraisers? 

[Paul Winka]

Originally posted by @Trisha Mauer:

What has the general market in that area done from when to bought to now?  Surely those stats must be available?  Other thoughts:

--Old sales data should be corrected.  The price you paid (and your old appraisal supporting it) should both be used.

--Comps: Did appraiser adjust for the superior condition for your property? We just got an appraisal for a cash-out refi in CA and in comps they add or deduct based on differences between properties.

--Only using MLS HUD1s: I don't understand the justification for that. CA is a disclosure state so most data is readily available, but I see no logic behind excluding MLS HUD1s, if they'll be favorable to you (just be sure they will be before you push for that)

We had completely renovated our house in the year since we bought it and wanted an appraisal about 40% higher than our purchase price...I provided two pages of intricate detail about the improvements, and that seemed to help.  

Over the years I've had some trouble with appraisers and found that nicely pointing out some facts they should include works best; I am always present when they come by and try to prep them with how great the property is.  To me the biggest error is not using your purchase price as a comp--the new price should be roughly that price adjusted for what the market has done since you bought.  It would be great to get an appraiser's opinion, but that's my take after a few dozen appraisers I've dealt with.  Let us know what happens!

Ok, so I will let you know what happened. I tried to outdo what the appraiser had done, and while I know that non-MLS sales would substantiate it, it just wasn't practical or worthwhile to try to make the case. The appraiser never called me back, probably following some code of ethics about never having a conversation with the prospective borrower. Just wasn't worth chasing down, call out the appraiser, make them re-do it. I lost this battle.

So, I let it go. Yes, $495 down the drain. But not really down the drain. I chose to frame this as "keep focus on the big picture" type of thing. I mean, I am getting 9 appraisals at once, close to $4700 spent on appraisals. Most of them were WAAAAYYY higher than expected, all offered significant cash out save for the one that came in at $70K, so if a 4 of the others were $5K less than what they were, I would be in the same spot as I am in now, and wouldn't raise an eyebrow. Going beyond that, I calculated that in the case of this one property at $70K, it's not worth refinancing, so loan fees for that one.

Having the right mindset as an investor helps a lot. Admittedly, it's hard to see it through that lens at first. 😀