Low Appraisal Advice

[Senta J.]

Hello,

I'm hoping someone could offer us some advice. We had a 2 unit property completely rehabbed and it is currently fully rented and cash flowing. We are in the process of refinancing the hard money loan we have on it and the appraisal came back at about half of what we estimated. 

Since there are no other fully rehabbed 2 unit properties in the area, we didn't have comps. We used SFRs that were flipped and discounted since ours is an end-unit townhouse and didn't have as many features as the flipped homes. We expected it to come in a around $200K and it ended up appraising for $105K. 

The comps the appraiser used are 2 unit properties that were not rehabbed. The appraiser added in few thousand for cosmetic items but did not add in any value for the new roof, electrical, plumbing or HVAC. 

Is there some way I can fight this appraisal without having to go back to the same person who appraised it? Apparently the lender spoke to him and he is unwilling to increase it at all. 

This amount won't even cover our hard money loan on it, we will have to come to the table with about $25K to pay off the hard money lender, not to mention our own money we have invested.

I would appreciate any advice on this issue.

Thank you,

Senta

[Steve Babiak]

You seem to have made the mistake of not creating an "appraisal package" - a document that gives all of the repairs that were performed and also supplies comps that the appraiser should consider. These are things that help to make the appraiser'so job a bit easier.

And a lender on the refi is almost always only going to use their preferred appraiser. You might not be happy about that I imagine ...