Challenging an Appraisal

[Sean Kelly]

Hi All, I recently rehabbed a home in metro Detroit and am utilizing the BRRR method. I'm in the process of challenging my appraisal as I feel the appraiser seriously limited the area in which he would consider a comp. The home is located in Ferndale which sits adjacent to Hazel Park. The issue I'm having is that area of Ferndale which the house is located in utilizes Hazel Park schools. The appraiser noted that Hazel Park Schools are inferior to Ferndale and therefore he will only select comps with the criteria, "located in Ferndale, but in the Hazel Park school district". This limits the comps to approximately one square half mile in which there are really no recently closed flips, rehabs, etc. on the MLS. Any thoughts on how I can address this with the appraiser? I was thinking he could just take this issue into consideration with an adjustment? If I remove the criteria he set, great comps come in just blocks away - many of which are higher than I even expected to refi for. Appreciate your time/comments!

[Patricia Steiner]

Appraisals are generally based on comps within a one-mile radius of the subject property. If there are no comps within the past 6 months, the appraiser can go out longer to say a year to find comps or can expand the radius slightly. But once an appraiser has issued a report, the challenge is over. If you can intervene prior to the report being written, additional comps can be provided to support valuation.  Debating the market area is not an appropriate challenge. 

My recommendation would be to find other comps within the mile radius; while only closed sales are used in valuation, I would even look at pending sales and submit those as a Hail Mary.   

It is what it is and school districts have a substantial impact on property valuation. Buyers will pay more to be in the "right/better" school district all day long.