Unexpected low appraisal

[Todd McFarland]

Hello community. I recently purchased a renovated townhome to hold and rent. I negotiated $17.5k off the asking price of $147,500 in hopes to get an appraisal value in that range to be able to finance with little to no money in the game. I really didn’t understand the appraisal process until after receiving the low value. I noticed in the report that none of the rehab was considered in the estimate, especially when looking at the comps the appraiser used. He valued the conditions as average, where all are new. Updating is as follows: Flooring is new wood(living room and 2nd bedroom), carpet (stairs and master bedroom), and ceramic tile (entry, kitchen, and master bath). New cabinets in kitchen and bath with quartz countertops, walls were textured and painted, fireplace has new brick facing. 

Is there any recourse to get the appraisal to come up to the $155k range? Will the appraiser take into consideration the updates done if made  aware of them and resubmit his value? Or is all this a waste of time?

[Caroline Gerardo]

The time to submit information, comparables is BEFORE the appraiser goes out. You should have supplied a list of three to four sales in past three months with same square footage and condition. Residential appraisers do not look at ARV so your loan officer failed you when they did not ask enough questions.

Average condition means average materials used appropriate for the market. Paint zero value. Carpet zero value add. Now maybe if your comps have old linoleum counters that are peeling vs gorgeous quartz there might be a $1000 adjustment up there. Remodel costs do not equal adding to value.