Appraisal issues on house I am flipping

[Luis A.]

Ok, so for the first time I have to deal with one of my flips not appraising for the sales price. I gave the appraiser a list of comparable recently sold, a list of repairs and before pictures of the condition of the house. I even provided a previous appraisal that had been done in November 2010 that came in at $112k.

I am selling the house for $100k and currently have a contract for that amount. The appraisal came in at $95k.

I am trying to figure out what I can do to fight this appraisal. First thing I want to do is to talk to the appraiser to make sure he got all his facts right and figure out why he came up with that amount. Second, If I recall right I might be able to request another appraisal?? I know I might have to pay for it but I am confident that a second appraisal would come in significantly higher.

Any other ideas what I might be able to do to fight this?

[Mike G.]

Originally posted by J Scott:

I had one a couple months ago where the appraiser thought the contract price was $8K less than what it was (almost 10% less than it was), and it was clear the appraiser just went so far as to get the value to where he though the contract price was (which in actuality was $8K too low).

Once he realized that he screwed up on the contract price, he "magically" was able to justify a much higher value with a new comp and some additional adjustments.

Yes!!! Thank you, Jason and BiggerPockets! We just had this happen to us. The appraisal came in $10k below the contract price. We asked for the appraisal report and then noticed that the appraiser indicated that the contract price was for this lower amount (the amount of the appraisal). My agent called the appraiser and it turns out he only received the initial offer (which was for that lower price) and not the counter-offer which agreed upon a price $10k higher. With that updated information, our appraisal was increased the $10k to the actual contract price! Yay!

[J Scott]

Originally posted by Mike G.:

Yes!!! Thank you, Jason and BiggerPockets! We just had this happen to us. The appraisal came in $10k below the contract price. We asked for the appraisal report and then noticed that the appraiser indicated that the contract price was for this lower amount (the amount of the appraisal). My agent called the appraiser and it turns out he only received the initial offer (which was for that lower price) and not the counter-offer which agreed upon a price $10k higher. With that updated information, our appraisal was increased the $10k to the actual contract price! Yay!

Btw, two things we do differently after this experience:

1. We ALWAYS ensure that the final contract is a clean contract with the actual sale/purchase price on the front page, not hidden in back in a counter-offer or addendum;

2. When we meet with the appraiser, we ask him flat out, "So, what do you have as the contract price?" We actually averted this issue from happening a second time by asking this question. Somehow he had a price that was $5K less than the contract price (and I still have no idea where the incorrect price came from).