@Jeff Plotkin there are many ways an appraiser arrives at their opinion of value. They will look at the income approach for rental properties, which takes into consideration NOI and cap rate, cost approach and most commonly, sales comparison. The one issue I see most often when appraisals come back low for an investors cash out refinance is that they didn't consider the median home value. Sometimes a proeprty owner will select the highest sales comp with the closest age, size, room count, bed, baths, etc...buy they will not look at the number of homes sold and the median value of them. For example...maybe the house next door sold for $165k...but it was the only one in the immediate market that sold for that amount BUT let's say there were 5 other homes sold that were similar for $125k. The median and mode is the better variable when looking at an appraiser. Also remember an appraiser assigns an opinion of value that is supposed to be impartial and unbiased. So, in theory, the owner always wants the value to be higher....because a higher value is in your interest. And the bank always wants the value to be lower...because it reduces the banks risk exposure. The appraisers job is to evaluate ALL variables and determine their opinion of value that satisfies BOTH parties. I suggest that you go back and have an agent run a market comparison report and look at the Median and Mode of your immediate market. If the numbers still come back wrong, you can do an appeal by going to another appraiser...but you are going to pay a new assignment fee. Let me know how you make out!
