All Forum Posts by: Ben Haab

When the appraiser is being paid by a bank, the appraiser is going to lowball you. The appraiser wants more business from the bank, and this is a reliable way to get it. There are various reasons why this is true, but the reasons don't matter as long as the outcome is the same.

It really is that simple. Yes, you're right. No, you can't avoid the lowballing.

Agreed, this is my point. Appraisers only incentive is to low-ball and NEVER come in over the contract price (by definition of what they are doing and why), therefore it is useless process (unless the purchase price is way way out of control).

Appraisers are just costing people money and cannot provide a more accurate valuation than within 20%.

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Originally posted by @JD Martin:

Originally posted by @Ben Haab:

Definitely have to play with appraisers - but how can, in this example, 2 separate appraisers vary by approx 15% and use 3 completely different comps.

Further - what is the definition of the appraised value? If it is market value and I have 3 offers that support the value then how do does the appraiser know better than the market?

My point - appraisers are nothing more than gut check on value and NOT a precise science, therefore if there are multiple offers within a short time of listing then the appraiser should agree with the market. Otherwise they are just saying would they would pay for the house.

Well, never forget that the appraiser works for the bank, who wants to see as much of the buyer's money and as little of theirs, as a ratio, in the deal as possible. Lower appraisal means better protection for the bank. A cash buyer doesn't need an appraisal, because they know what the market value is (what they're willing to pay). The bank's main goal is to collect interest. Their primary safeguard to protect that goal is forcing their partner (the borrower) to have as much of their own money in the deal as possible, such that if they quit making payments the bank is whole. One way of doing that is to lowball the appraisal - since most buyers don't have the ability of coming up with more money, it forces the seller (at least to that buyer) to take a discount as a cost of doing business. It makes you eat the bank's insurance, so to speak, because if you accept the cheaper price, and the buyer defaults, the bank knows it can get its ratio back out of the property.

Understand about the bank's position and unfortunately at this purchase price it's typically 'first time buyers' with little to no money down.

But the thesis you are working on there smells of collusion: bank wants a better ratio or less money in therefore 'works with' the appraiser to lower the purchase price. When I got back to the appraiser should be completely 3rd party and estimate the market value...

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Definitely have to play with appraisers - but how can, in this example, 2 separate appraisers vary by approx 15% and use 3 completely different comps.

Further - what is the definition of the appraised value? If it is market value and I have 3 offers that support the value then how do does the appraiser know better than the market?

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Originally posted by @Chris Volkers:

That sucks man. I remember seeing that house, you did make it beautiful! It's not easy to prove the value on the nicest house in a neighborhood.

Thanks Chris. Agreed that this may be the nicest house in the neighborhood...but if the market supports it and multiple buyers...

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Appreciate the suggestion Chris. You are correct on location. Realtor has provided correct comps, but appraiser has rejected them.

The simple fact that 2 appraisers were off by $20k and the first appraiser would not list to reasonable comps is an issue in my mind.

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Is it a trend that appraisers are consistently coming in short?

Multiple offers at the same price and an appraiser won't support the price.

Full story:

Flipped 1827 Hepler Dr, Warsaw, IN (look it and how beautiful it is...)

Listed 154,900

Under contract at 150K within a week and half after many showings and a different offer from a buyer without real credit approval. Appraisal comes back at $115K. VA buyer...dead deal, put house back on the market.

Under contract again at 149K within 2 days with a USDA buyer. Appraisal just in at 136K.

My house: 4 bed 2 bath fully updated including mechanicals

Appraisal 1: 3 comps. Comp 1) 3 bed 1 bath manufactured house without the title retired (so you can't get financing). Comp 2 & 3) both 3 bed 1 bath homes that weren't updated and sold a year and half ago

Appraisal 2: 3 completely different comps. Closest real comp is in the same addition but the sellers disclosure listed many defects including the roof.

My point: what is an appraised value supposed to be?

Per Google: "A home appraisal is an unbiased estimate of the true (or fair market) value of what a home is worth." If that's true then the market supports my sale price due to multiple buyers offering the sale price and very stable economy in our area.

Note: my realtor is appealing the appraisal and providing better comps, but in realty this rarely works.

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All Forum Posts by: Ben Haab

Ben Haab has started 1 posts and replied 36 times.

Post: Are appraisers pulling the market down?

Post: Are appraisers pulling the market down?

Post: Are appraisers pulling the market down?

Post: Are appraisers pulling the market down?

Post: Are appraisers pulling the market down?

Post: Are appraisers pulling the market down?