Successful Appraisal Appeal

[Warren Juall]

Hi BP, 

So as value has been appreciating, I figured I'd consider refinancing my 3-family and taking some cash out to use for other investments. 

After finding the right lender at a good rate (same as I got in 2017, surprisingly), I got an appraisal. The appraisal came back $40K more than I purchased the 3-family for in October of 2017. Not bad considering few updates. However, I had already done research into what the appraisal amount should have come back at and I didn't agree. So I filled out an appeal form, stating what I felt needed to be changed. After the appeal, the appraisal came back with an additional $20K in value ($60K above purchase price). Although I was hoping for more, I was satisfied with the result.

My appeal looked like below:

I am not disputing the comps used because there is limited supply in the area. I am appealing how the value was calculated as described below:

***Income Approach

1.) Market rent for 1br, 1bth in Shelton in current condition is between $900 and $1,100 - $800 was used

2.) Currently, garages rent for $100 each ($300/month total) - this is not factored in income approach

***Sales Approach

1.) Property Conditions

a.) Appraised Property had very similar improvements to those made to Comp 1 in 2015 including a new roof, 3 new hot water heaters, 3 new gas burners, 3 updated kitchens and 4 updated bathrooms. Comp 1 also has aging siding, so nothing about exterior condition should be deducted from appraised value.

b.) Unfortunately, the other two comps used in sales approach had very few pictures in the listings. As a licensed real estate agent, I went and looked at both Comp 2 and Comp 3 when they were on the market. They had many issues, including aging burners and hot water heaters, aging flooring throughout, aging appliances, and aging cabinetry in kitchens and bathrooms. Substantial renovation would be needed to bring to Appraised Property's current condition.

c.) The condition of Appraised Property is far closer to that of the condition of Comp 1. The $40K deduction should be reduced, and there should be an adjustment made to factor the dilapidated conditions of Comp 2 and Comp 3 when comparing to my property.

2.) Sq. Feet - I am hesitant to believe that Comp 2 is 3,546 square feet, only 100 less than the 4-family Comp 3. The listing agent may have combined both living area and basement area in that assumption (as she did on Comp 3 - she was same agent). This might be worth taking a second look at.

3.) Parking - A $5,000 adjustment for a 3-car garage and off street parking where no comps have a garage or off street parking seems low. I would imagine due to the low supply of off street parking for multi families in the area, having a 3 car garage and driveway with additional space should add more value. 

Does anyone have any experience appealing appraisals when refinancing? Has it worked? 

Thanks!