What the heck is up with home appraisals?

[Exterous]

I had two appraisals done on my house in the last 5 months. One for purchase the other for refi.

Never had much to go on for comparisons before now but holy crap I didn't realize how much inconsistency you could get.

The old report had our sq ft listed incorrectly by about 100 sq ft.

In the old report an additional full bath was worth $5k. The new report has them at $10k

In the old report a 13 year old house had a negative $10,000 adjustment
New report has no adjustment for a 14 year old house

The new report has our 2012 house listed as 4 years old but has two houses built in 2014 as 1 year old.

The old report has a 300 sq ft basement rec room work $1500 or $5\sqft. The new report has a 1 rec room, half bath, 1 other for 1300 sq ft listed as $20,000 or $15.4\sq ft. Even if I give $5k for the half bath thats still $11.5\sq ft

WTF

 

[dullard]

Home appraisals aren't intended for consumers. They are intended for banks to know if the loan is in the ballpark or not.

I find them a little scammy since they tend to appraise to the penny at exactly what an offer for the house is. Which doesn't seem realistic to me that a full independent review by a person who actually knows the market better than most consumers comes up to the penny with the exact offer that a random potential home buyer (who may not really know home values very well) offered for a house.

That said, what a person offers for a house is generally at least close to what a house is probably worth, so it shouldn't vary that much either from the offer value in most cases.

 

[Exterous]

That said, what a person offers for a house is generally at least close to what a house is probably worth, so it shouldn't vary that much either from the offer value in most cases.

Seems pretty crazy that the numbers are so arbitrary given that banks base PMI payments on the appraised value. Some of the differences in adjustments are $15,000. That could make quite a bit of difference in terms of how long someone who doesn't put 20% down could pay PMI

 

[John Connor]

I had a so-called "drive by" appraisal. Yeagh, they drive by, make a massive estimate of your home and bang! Your freakin loan goes up with higher taxes! City has that shit all figured out.

 

[nakedfrog]

I had a so-called "drive by" appraisal. Yeagh, they drive by, make a massive estimate of your home and bang! Your freakin loan goes up with higher taxes! City has that shit all figured out.

You're talking about a tax appraisal. That's not the same thing.

Your loan also does not go up with higher taxes, your loan is not changed at all. Your monthly payment will go up, due to the need to fund your escrow account to cover the increased taxes.

 

[edro]

I agree, they are aggravating, especially on a refi if the value is less than the mortgage without anything changing.

I had a so-called "drive by" appraisal. Yeagh, they drive by, make a massive estimate of your home and bang! Your freakin loan goes up with higher taxes! City has that shit all figured out.

My county tax appraisal has always been much lower than the mortgage appraisal, so I have never questioned their methods.

 

[Capt Caveman]

I had a so-called "drive by" appraisal. Yeagh, they drive by, make a massive estimate of your home and bang! Your freakin loan goes up with higher taxes! City has that shit all figured out.

Wow, so sad. How does your loan go up?

 

[blackangst1]

Home appraisals aren't intended for consumers. They are intended for banks to know if the loan is in the ballpark or not.

I find them a little scammy since they tend to appraise to the penny at exactly what an offer for the house is. Which doesn't seem realistic to me that a full independent review by a person who actually knows the market better than most consumers comes up to the penny with the exact offer that a random potential home buyer (who may not really know home values very well) offered for a house.

That said, what a person offers for a house is generally at least close to what a house is probably worth, so it shouldn't vary that much either from the offer value in most cases.

This.

edit: The only time you're going to get a REAL appraisal is when you're NOT selling your house. Call a 3rd party appraiser and get the full monty done (measure every room, look in the attic, etc).

 

[TwiceOver]

The appraisers basically tell the bank what they want to hear.

 

[master_shake_]

I had a so-called "drive by" appraisal. Yeagh, they drive by, make a massive estimate of your home and bang! Your freakin loan goes up with higher taxes! City has that shit all figured out.

same thing here.

they don't even come out they just look at the neighbourhood.

 

[pete6032]

Wow, so sad. How does your loan go up?

I think he meant his monthly mortgage payment, which includes property taxes, went up after his home got a new tax appraisal.

 

[NutBucket]

The appraisers basically tell the bank what they want to hear.

Right.

And LOL @ $5 per square ft!

 

[kage69]

The report should contain info on the adjustments. Any sales comparisons that transferred more than 3 years ago isn't going to give a good indication of present market value.

USPAP certified appraisers are subject to having their appraisals reviewed by other appraisers, maybe you should make some noise about wanting one. Tell them your appraisal smacks of a lazy person using older reports from the same neighborhood and just tacking on 3% per year since last transfer.

 

[NutBucket]

From what I gather it really is market dependent. In SoCal they only use sales within the last 6 months. But, our market is always active so that's easy.

 

[sdifox]

Different up here. The appraiser comes in the house looks the house over including basement and attic. They have the measurements already just checking for unreported upgrades.

 

[SSSnail]

That's crazy. My house was appraised before purchase and they not only measured every inch in and outside the house and looked over everything including building materials, but also taken in the quality of appliances, as well as 3 other comparisons in the immediate area for baseline.

 

[postmortemIA]

There was some law change in 2010s that was supposed to limit communication between lenders and appraisers.

i'm not seeing it working, when I tried to refinance, it was all great with lender until appraisal; then suddenly I'd have to have PMI. Guess who benefits from slightly lower home value...

Appraisal can be fixed so much against the owner. What I've seen is that appraiser has found a cheaper and bit older home with more sq ft and then just adjusted mine negatively... and ignored most of my upgrades.

 

[NutBucket]

I don't buy that. I mean, we bought in 2014 and the appraisal matched the contract price. Some coincidence, eh?

That's also bs if condition isn't taken into account. But then again I've found that unless you're talking granite vs. laminate or something it doesn't make much difference. Hell, I see a number of listings with 50's bathrooms. Does that affect the price one bit unless they're in disrepair.

 

[Exterous]

All the comparisons from both appraisals were within the last 9 months prior to the appraisal being done. He did go in and measure everything but so did, supposedly, the other appraiser. Someone doesn't know how to use a tape measure or add but I haven't had a chance to do my own measurements yet to find out which one

That's also bs if condition isn't taken into account. But then again I've found that unless you're talking granite vs. laminate or something it doesn't make much difference. Hell, I see a number of listings with 50's bathrooms. Does that affect the price one bit unless they're in disrepair.

They kinda do although it is an effed up methodology. Apparently you get a C1 condition if your house is new construction, done falling down, and no one has lived in it yet. There were a couple of C1s on our report. The fucked up thing is that our house can't ever be listed as C1 because we are not the original owners so we got the next highest C2. That was a $10k hit. I was actually in one of the other houses and our finishes\exterior landscaping\back yard etc is actually better but because of the way the stupid rule is written we take a $10k hit regardless.

I don't think condition matters much as some of those additional full baths were cheap looking basement bathrooms. They don't look bad or anything just vinyl flooring, cheap toilets\vanity\lights etc. I'm half tempted to spend $2k on adding a basement bathroom and have the appraiser come back for an instant $10k improvement in my appraisal.

 

[sportage]

Appraisals can be screwy.
Typically, comparisons are done for similar homes that sold in the same area.
Sometimes they unjustly compare homes in far different areas.
Or homes that are not near the same type or size of home.
In areas where home sales are down and rare, they might need to go outside the local area to find a home to compare.
Comparisons can be a mess and quite unfair.
I guess its the nature of the business.

 

[s0me0nesmind1]

The appraisers basically tell the bank what they want to hear.

Pretty much, I thought one of the issues with the mortgage crisis was that the appraisers would always say exactly what the banks wanted to hear in order to ensure the loan went through... basically low-balling it so the mortgage wasn't denied.

I don't buy that. I mean, we bought in 2014 and the appraisal matched the contract price. Some coincidence, eh?

That's also bs if condition isn't taken into account. But then again I've found that unless you're talking granite vs. laminate or something it doesn't make much difference. Hell, I see a number of listings with 50's bathrooms. Does that affect the price one bit unless they're in disrepair.

This. We did a refi about 2 years ago - the appraisal they gave was SPOT ON for the original loan amount. No seriously, to the dollar - which was exactly $140k

 

[Thump553]

An appraisal is just an OPINION as to value-much like the weather forecast. Taking it as establishing firmly your house is worth exactly X dollars is simplistic thinking.

As for the appraisal exactly matching the sale price, that is not uncommon if the appraiser (a) knows the sales price and (b) has concluded it is worth at least that amount. Take it from someone who has been around real estate a long time, when the sales price is $250k and the appraisal comes in at $300k the seller is going to be very prone to breaking the deal if at all possible.

A 100 sq. ft error is pretty trivial and may not even be an error, just a difference in measuring techniques (measuring outside of walls versus inside) or what is counted as living space.

The real problem with appraisals in the last 8 years has been including short sales and foreclosures in the comparables. They greatly lower the value-but such is life in modern America.

BTW a major part of the post-2008 reforms is that the banks have NO power to select the appraiser, so the appraiser has far, far less incentive to "tell the bank what they want." This was a very meaningful reform.

 

[Exterous]

An appraisal is just an OPINION as to value-much like the weather forecast. Taking it as establishing firmly your house is worth exactly X dollars is simplistic thinking.

Don't see anyone in the thread saying it was being taken as a firm house value. An opinion varying by $15,000 on the same house is odd that is solely based on specific facts like age of house and number of bathrooms. The value of an additional full bath for an area strikes me as a pretty good place for a consensus instead of a 200% variation in valuation. Not to mention the lack of consistency when calculating the age of the house in the same report by the same appraiser.

 

[Cheesemoo]

appraisals for home purchase just go up to the point of your offer. They just want to know if the house is at least worth what you are paying. To get a true appraisal you will need to hire a licensed third party appraiser. Anything tied to a bank will not be true value.

 

[Bacstar]

When I got my VA loan for my condo, the appraisal came in about $1000.00 more than what my loan application was for. I was told that if the appraisal was lower, I would have to cover the difference. I found it "interesting" to say the least once it came back because I was kind of worried that I would have to fork out some extra cash...