Appraisal / Refinance Troubles - Need Advice!

[Nathan Faucett]

Hi -

My wife and I bought a 2700 square foot house (living space) in June of 2019 for $235k in Greensboro, NC (Zip Code:27410). About 1000 SF of that was a below grade, walk-out basement that was in really rough shape. It had 1 bedroom, 1 bathroom, 1 small office, and was completely outdated and gross (Acoustic tile painted black, painted wood-panelled walls, nasty dog-smelling carpet, etc)

We put about $30k into renovating it - It now has 2 bedrooms with new walls, drywall ceilings, a full kitchen, completely new bathroom, new light fixtures, etc - it is essentially a luxury condo that we are now househacking with.

We sought a refinance in July 2019 and an our appraisal came back really low - only $250k. One of the main reasons for this was that time was no "Date of Sale/Time" adjustments made even though the comps went under contract in May 2020, December 2019, and February 2020. Based on form 1004MC2 - Market Conditions Addendum to the Appraisal Report - Median Comparable Sale Price increased from $207,500 to $231,500 over the past year - an 11.6% increase! If you go on Zillow and blindly look at my zip code, the change from September 2019-August 2020, it goes from $248,000 to $262,000 - an 5.6% increase!

We have challenged this appraisal and our bank has told us that we can pay $300 (a $250 discount) for the same appraiser to add new comps (and there are much better comps now), but he seems unwilling to make any changes based on "Date of Sale/Time" OR we can pay $550 for a brand new appraisal to be done.

Is this typical? What would you recommend doing? Why? Any other advice that you might want to provide?

Thanks in advance,

Nathan

[Nathan Faucett]

@Forrest Faulconer - Thanks for the swift feedback

I honestly don't have a lot of information about comps in the area because our house is pretty unique to our market (a walk-out basement with a kitchen is pretty unique), so it is difficult to use non MLS tools to tell us too terribly much. However, the new comp that would be considered by the appraiser is a home in our neighborhood that sold in August for $284,000 that is pretty similar to our house in a lot of ways (has a basement, similar square footage, similar condition, etc)

According to the current appraiser, he had to go digging to find houses like ours, and those are the comps that he came up with.

There are some pictures included on appraisal report and I don't think we will be able to get much more than that for the comps that he used for the appraisal done in August 2020.

We have had a lot of learning experiences with this home so far and one of them is that while our basement is considering living space, it is below grade square footage, so the 1000 SF of living space is not included in the "above-grade square footage of the home". As a result, our house looks like a 1700 SF home, even though our basement is by far the nicest portion of the house. We didn't realize that was going to be the case, but again, it's a learning experience. 

I'm going to connect with our real estate agent, but figured I would reach out to see if other people had some advice for me as well. I don't mind spending $600 if it's going to give me $10-$15k of value in my home that wasn't initially realized, but I am just feeling pretty confused about the whole thing.

This is truly the school of hard knocks!