Rental Property Investor · Lynchburg, VA · Member since 2020 · 21 posts · 8 votes
I purchased a home for $35,000 cash in an area that is quickly coming up. We did a full rehab on this home (about $28,000 in renovations) and just got renters in paying $800/mo. Total investment = $63,000.
True comps within a mile radius recently sold for $87,000 - $125,000.
Our appraisal came back at $50,000. The comps that he used, in my opinion, were nothing like my project considering they were not renovated and one was condemned.
Now what? Do I take the low appraisal and Refi?Please help.
Richmond, VA · Member since 2019 · 17 posts · 7 votes
6y
Hi Logan, you could pay for your own separate appraisal after discussing with the appraiser/company that the renovation was not factored in - this appraisal may/maynot come in higher.
You can then take this appraisal back to the bank you are working with & challenge the earlier appraisal. They may/may not agree.
Best course of action IMO would be -
* get an appraisal from someone you have used before & is familiar with appraising renovated properites
* work with a banker & bank that you have worked with before that are familiar with your business - that it renovates properties - or atleast some bank whom you have accts with/dealing with.
Good luck!
I'm a Richmond, VA based investor. LMK if some deal comes the way that you pass on in and around Richmond, VA.
Richmond, VA · Member since 2019 · 17 posts · 7 votes
6y
Forgot to add - also request an assessment review from the County/City - specifically stating that DRAMATIC improvements have been made - they may issue a higher assessment that may help getting a higher appriasal or support your case to the bank/lender. This may also trigger higher property tax though... so keep that in mind
Contact your lender and discuss the appraisal. Sometimes they will allow a second appraisal. I have challenged an appraisal before provided all the facts and had it adjusted from 160K to 190K. It was a fight, but I was successful.
Richmond, VA · Member since 2019 · 17 posts · 7 votes
6y
Hey @Loganbosiger read through @stephenglover's thread. Great post! Persistence with your current lender using data to support your argument. I suggest trying that first rather than spending your own money on a new appraisal, new banker etc that may not go your way.
Rental Property Investor · Chicago, IL · Member since 2019 · 77 posts · 36 votes
6y
Change lenders so you can order a new appraisal with a different appraiser. I’ve had this happen a few times and with a new lender 2 weeks later, I saw a $40,000 difference in value.
Rental Property Investor · Minneapolis, MN · Member since 2016 · 214 posts · 132 votes
6y
@Logan Bosiger
Challenge the appraisal hard. Understand every line and comp. tell them remove this comp because of the condemnation. Add this comp because it is more similar.
Who is your lender? Major lenders can have conservative appraisers.
Challenge the appraisal with the lender and have them send out another appraiser. Your likely two low to force the current appraiser up enough, but no harm in trying. Definitely walk on you lender if they aren’t responsive to your concerns.
Lender · Turlock, CA · Member since 2015 · 46 posts · 33 votes
6y
I would ask for an appraisal reconsideration. You will have to provide supporting comps that you feel are better than the ones the appraiser used. I'll be honest though, appraisers rarely change their mind. If that is the case, I would start a new loan application with a different lender and order a new appraisal.