Crazy Low Appraisal
Dear Brownstoner, So I wanted to get everyone’s advice on what to do. I recently bought a three family in early August in BedStuy for $650K. I went to get a Home Equity Line of Credit from M&T Bank to cover cost of renovation overages. The appraiser came to my house twice and the bank…
Dear Brownstoner,
So I wanted to get everyone’s advice on what to do. I recently bought a three family in early August in BedStuy for $650K. I went to get a Home Equity Line of Credit from M&T Bank to cover cost of renovation overages. The appraiser came to my house twice and the bank declined my application because he appraised the house at only $400K.
I was in shock as I’ve put over $100K in renovations so I would have expected the house to go up versus down.
Have housing values in Bedstuy dropped that far in less than three months? Anyone else have this happen? When I look at realestate listing similar to my house they are all in the 600-700Ks.
Does anyone know another bank I can reach out to submit another application.
Thanks
Faye
I don’t want to sound harsh, but not sure why you think you could get a HELOC when prices are coming down down down and bedstuy will be one of the worst hit. listing prices mean nothing unfortunately…
We had this problem once (ironically, with WAMU). In areas where people are doing a lot of renovating, the appraisers often can’t tell the renovated houses from the unrenovated, and getting unrenovated houses into the appraisers comp mix can throw the appraisal way out of whack.
Do your own homework, first. Get a bunch of comps you think are truly comparable — very close to your house, similar stock, and in the price range you need. Try going back to the bank with those — you may get a reconsideration, although highly unlikely in this climate. Next, take your appraisal and your comps to Wells Fargo or a mortgage broker, explain the dilemma and see if they think there are possibilities. Alternatively, you may find there are no comps to support your price; just be ready for that possibility.
Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgably, prudently, and without compulsion.
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.[3]
anyway, thats straight out of wikepedia.
close, current , clone
economic principal of substitution.
appraisal came in ” low ”
what do you mean by low? Low based on what credible and defensible value that you came up with?
also, what did you spend $100k on? is a typical buyer willing to pay for the cost of those renovations?
why pay 600k when you can get something for 500k with similar location, utility, quality and condition in the same market area?
the comps the appraiser used may be non-arms length transactions, short sales ( in which only the first lien is paid off ), reo, family sales, flips etc.
lowballing fraud is happening too to cause people to panic and dump their properties
wake up people!!!!
“You need to find an appraiser that knows the hood . Many times banks send out these idiots that know nothing about Brooklyn .”
I have some bad news for you. Brokers cannot order Appraisals anymore. They come from a “Bank Pool” of approved Appraisers. Plus Underwriters are cutting Values in a “Declining Area” and this is very bad your zip code.
“I was in shock as I’ve put over $100K in renovations so I would have expected the house to go up versus down.”
“Sweat Equity” id great when values are going up but in a down market the Bank will not consider the amount of money you spend “improving” your property.
“Have housing values in Bedstuy dropped that far in less than three months? ”
Yes! We are in a different lending environment and the Mutant Asset Bubble has imploded!
“Try Wells Fargo–but insist that they have someone from NYC appraise the property. We once had an appraiser from Suffolk County appraise our place at about half of the market value— we had to pay fr the second appraisal, but it was worth it. Good luck!”
That Bank you submit that second appraisal thru better know about the first one. You and the Broker/Bank could be in trouble.
“Does anyone know another bank I can reach out to submit another application.”
You are wasting your money chasing values that don’t exist anymore. Save your fees and enjoy your investment. That’s why you brought your house, right??
The What
Someday this war is gonna end…
Slumlord, I tried to email you but your email didn’t work. Do I have the right address? hartstsguy@aol.com?
Thanks again for your help,
Faye
OP here. Thanks for everyone’s advice. My mortgage appraisal for my three family (4 stories) was $700K in July of this year so I think the appraiser isn’t doing his job right.
I do think however that I am going to wait til January to re-apply for another HELOC as I have had my credit pulled alot this year and I don’t want it to drop because of too many inquiries.
Thanks for everyone’s help,
Faye
Prices have gone down a lot since 2006 (not Aug) but I would still expect a three-family to be worth at least $500,000 at this point. Short sales of two families in Bushwick can be found in the $400,000s. They are in poor condition. I also know of a comp in Bed Stuy that closed in Aug in the high $400,000s and was a three family (in what was originally a two family, so just three stories plus an underground cellar). Also I would think the location and condition of the house could make a difference.
Check your house on the NYC Department of Finance’s website. It will give you an estimated market value. If you don’t know your block and lot, just type in your address to search that way. DOF is a little low on the values, so you may want to use that as a guideline.
Try Wells Fargo–but insist that they have someone from NYC appraise the property. We once had an appraiser from Suffolk County appraise our place at about half of the market value— we had to pay fr the second appraisal, but it was worth it. Good luck!