HELOC Loan appraisal issue

[Swarochisa Kandregula]

My wife and I applied for a 200k heloc loan at a local credit union. Our house(new townhome 2021) on redfin was valued at 1.08M when I applied and the outstanding mortgage was about 682k. With this valuation I was sure that 200k would be less than 90LTV. The underwriter got back to us saying they couldn't approve us for 200k and instead countered with 142k . I called up the loan officer and she told me that the appraisal came back at 912k ( or 920k , I couldn't hear it clearly). I knew the appraisal would come back lower than what I saw on redfin but I didn't think it would be this low. She told me that I could pay for a full appraisal or a desktop appraisal but that doesn't guarantee an increase in the appraisal.

While I was discussing this with my wife , I looked up our neighbors house ( built at same time) which was listed for sale about a month ago. It was sold on 9/20/23 for 970k. This house has the same layout and sqft as ours. I emailed the loan officer about this but I would like to know my chances of getting the 200k loan with this new information( I may not get 200k but anything closer to that number would be great). Should I go for another appraisal? Desktop or the full one?

[Patricia Steiner]

Shopping appraisals is risky...and not recommended.  What you need is a copy of the appraisal that was already done on your home to see what comparable sales were used in calculating your valuation.  A sale in itself is not 'comparable.' Appraisers and Brokers go through a process that 'adjusts' the sale to make it comparable to - in this case - your home. There are a lot of factors besides those that you mentioned.  So start by asking for the appraisal.  See if all the sales in your market (defined as 1 mile radius), within the last 30 days, that are within a 10% square foot differential were included. If there are sales that you feel should have been included and were not, submit those for review.  Start there.  And, know this:  online valuations are not accurate. They have a standard deviation of 12% to WTF.  They are based on derivatives rather than sales that meet the appraisal standard.

Start by getting the appraisal.  As large as the difference is, it is unlikely that you will be able to get to the $200k mark.  It's still worth doing the work to find out.  Hope this helps.  (Frustrating isn't it!).