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runetodda · Joined: 28 Oct 2010 Posts: 1 1.71 Dollars($)

Good day to all.

I live in Osceola County, Florida. I've been disputing what I feel to be an unfair, error-filled appraisal done to my home that cost me the opportunity for refinancing. I'm not alone in questioning this appraisal--I recently sent it to the Osceola County Property Appraiser's Office and it was reviewed by their CFE (Certified Fraud Examiner). He also agrees that the appraisal is faulty, poor, questionable and does not represent the true value of my home at all. He backs up his opinion with many examples of what he feels to be mistakes and errors he found on my appraisal.

I also believe the appraisal company and bank are using suspicious, possibly fraudulent arguments to deny the use of a comparable property that I found--if the comparable was selected, I would have instantly qualified for my refinancing. Again, I have details to back this up. I believe I caught them in a lie when they argued against this comparable, so they had to come up with something new to avoid discussing their previous, faulty arguments. More than three months later, they completely abandoned their previous statements and invented something totally different--they now state the comparable I found was a private/For Sale Buy Owner sale and under their guidelines (which are based on Freddie Mac/Fannie Mae standards, or so they claim), these types of sales dismiss a property from being used as a fair comparable on an appraisal.

Is that true? Are there Freddie Mac/Fannie Mae appraisal standards that states this? I asked to see this standard in writing--they denied my request, claiming their appraisal standards are private company documents and will not be released to the public under any circumstances. I asked if ALL private/FSBO sales were banned from being used by their appraisers without exception--they refused to answer. I further asked them, after numerous exchanges with me on this subject over a span of three months, why did they NEVER mention this as a reason for rejecting the comparable before? Of course, they will not respond with an answer.

As another example of how ridiculous the appraisal was, I sent my information to my Congressman (Bill Posey)--suddenly after Congressman Posey got involved, the bank did a "drive by appraisal" (nothing written) and BLAMO! The value of my home went from $145,000 to $180,000. That despite of the fact that the real estate market in Osceola County FELL in the three months following my appraisal. The bank then assigned a value of $176,305 to my home and offered the loan to me. How did they arrive at that figure? Here's what the bank told me when I asked--"The value of the home is determined by Fannie Mae or Freddie Mac (depending on investor). We use an evaluation tool as determined by them."

I don't know what that means, but I asked if there was anyway I could review the accuracy of that figure or see how it was determined. The bank replied with this answer--"I am unaware of a public website that would list the value for you to view."

Anyhow, thanks to the new number, I was suddenly approved for my loan, but they absolutely refuse to admit to any problems with the original appraisal. I continue to fight them because I feel my home is worth much more than $176,305 or $180,000--a higher appraised value would mean much better terms on my refinancing. I say without doubt that my home should be appraised higher--the Osceola County Property Appraiser's Office agrees as well and sent comps to back this up. My other evidence? Among other things, I've pointed out to the bank and appraisal company numerous times that a five acre lot with no home on it, 5.4 miles away, sold for $177,500 about two months prior to the time of my initial appraisal--my property has six acres, is a 1660 square foot, 4 bedroom/2.5 bath home built in 1998, has a 2 car garage, drilled well and paved driveway...yet they claimed on my appraisal that my home would sell for $32,500 LESS than an empty field with less acreage!

I can go on for days here with example after example of the questionable responses I got from the appraisal company and the bank. I am so outraged by this mess--any advice would be greatly appreciated.

gmakerley · Posted: Thu Oct 28, 2010 11:27 am Post subject:

I see a little of everything here. Working almost backwards, I'd say that whatever the county has to say about the property value will have no effect on what a lender is going to do. There are two completely different comparisons here, and what a town and/or county does is as of a particular moment in time, and likely a while ago in comparison with a lender-related appraisal done recently. Don't try to hang your hat on that.

Your comparable on the 5 acre property isn't necessarily valid due to the excessive distance between it and your home. I don't know your marketplace, of course, but 5-plus miles is excessive distance when you're trying to evaluate properties.

I, too, would take umbrage at the lender's yielding to grant you the loan only after you got congressional involvement; but then again, that's why you went to the Congressman. Unless they could thoroughly justify their position to him, they'd pretty much have to fold in light of his inquiry.

The "evaluation tool" is not a myth - they do exist, and I don't know of any that might be available to the public.

As for Fannie and/or Freddie guidelines, any individual can go to their websites and search for appraisal guidelines. You'd have to be somewhat knowledgeable in order to search for the specifics you're trying to locate, usually; but their sites - with the moderate exception of some of their guides - are accessible to the public at large. Your lender ought to know this, also. Telling you that they don't know if you could look up anything there was more of a smokescreen than anything else.

I agree that you have a case for being irritated, frustrated and perhaps more in this instance. Fighting about the ultimate value they've come up with is probably a fruitless endeavor, though. If you can get the loan you want without further adieu, it strikes me as wise to go grab it while it's available.

gmakerley · Posted: Thu Oct 28, 2010 11:30 am Post subject:

I need to amend my last sentence. It should read as follows: If you can get the loan you want without further ado, it strikes me as wise to grab it while it's available.

Thanks for your time and energy.

Guest

Thank you so much for the reply, George. It's sobering and sad to read your response, as it seems impossible to have the appraisal company admit that anything was wrong with their work no matter what logic or alternative comparable I tossed at them. By the way, the third property that they used on my appraisal was 6.11 miles away--all the way in another city and county (Orlando in Orange County), so the empty lot was actually much closer.

gmakerley · Posted: Thu Oct 28, 2010 11:56 am Post subject:

Wow...6 miles...hard to fathom, frankly. Since the mortgage crisis began, comparable sales have received far more scrutiny than in the past, and for an appraiser to come up with such a long-distance comp seems awfully strange.

I can't disagree with your assessment that you've been done wrong, though I can't really comment on values all the way in Osceola County, FL.

Guest

Yes, this entire process has been hard to fathom. Just to elaborate on this point a little further if I may, Osceola County is HUGE and I pointed out much closer comparisons that were at least within my city and county. All were rejected. The one that mirrored my property much closer than any comparable used on my appraisal was the one they dismissed for some highly suspicious, if not fraudulent reasons before coming up with the "it's a private sale so it's not acceptable" defense.

I'm in a rural area to be sure, yet the other two comparisons used were 1.35 miles away and 1.77 miles away...so why did they go so far for the third comparable? A whopping 6.11 miles to another city and county? I have a theory if you wish to read about it.

It's in the bank's best financial interest to reject my refinancing attempt as it would keep me locked in a higher mortgage rate--luckily for them they own the company that would determine the value of my home. But I didn't need very much to qualify for government refinancing programs--only about $156,000. I think they threw a "Hail Mary" long bomb all the way to another city and county because the appraiser discovered a property that was an absolute, worst case scenario foreclosure with a real soul crushing, value destroying price. It guaranteed an untimely demise to my loan application. This property sold in foreclosure for only $125,000--the much more fair comp I found sold for in foreclosure as well, but for $191,000.

What's so utterly frustrating is that the property for $125,000 was such a fluke and by no means could possibly represent the value of my home. Osceola County also agreed with me on that point, but as you pointed out that seems to add up to a hill of beans to the bank and appraisal company. It was in real bad shape--broken windows, gutted kitchen and so on. It was much older and had 1.3 acres less land than my property. It was in such a state of distress that appraiser noted on its sales history that it previously sold for $300,000, then $100 then $100! It was quickly repaired by the new owner and put back on the market for $341,900, although Orange County only appraised it for $284,769. Ugh.

I know I can't prove my crazy conspiracy theory, but I put it out there for people to remember when they're looking over a low appraisal delivered to their property. I fear for all the people not as stubborn as me who might look at their appraisal and give up, not knowing that that they should do research, look for other comparables and fight back as hard as possible if they see something suspicious. These low appraisals, if left unchallenged, can do harm to a person's financial well-being as well as to their neighborhoods.

That all aside, George, I'm not sure if I saw your thoughts as to my question posed in the topic line--have you heard of properties being dismissed as a comparable because they were a private sale? That's the brand new reason why the bank won't accept the comp I pointed out. Here's the exact quote they sent me--"Additional research indicates that this property was sold in a private sale and, since the terms of these types of sales are not made public, it was excluded from your appraisal."

Does that sound legit to you, George?

Thanks.

apexoffice · Posted: Thu Oct 28, 2010 9:04 pm Post subject:

Actually, this sounds more like an appraiser’s policy, not the lender’s policy. For the most part, I will often elect to disregard a private sale and use only sales that were marketed by agents in the MLS. The terms of a private sale are not made public and are often concealed by the parties to the transaction. If these sales are used, it is the responsibility of the appraiser to verify the terms of the sale, including any unidentified concessions which may require an adjustment. I ran into this just a few months ago when a homeowner told me that a home on his street sold for $30,000 more than the rest of the homes in the subdivision. It was a private sale. After some investigation and contacting the buyers, it turned out that the price included all of the furnishings and a boat in the garage. The additional amount was paid as cash out of pocket separate from the financing, but the actual sale price was all inclusive. I could have included the sale at this point, but a $30,000 negative adjustment would have been applied.

The problem is that, while I was able to get some good information on this one, this is not typically the case. Sometimes, we attempt to contact the parties to the sale, and they get quite upset that we bothered them with such questions. Couple that with pressures from the lender on turn-around times, and we often don’t have time to be calling around and asking a bunch of questions, it is just easier and less time consuming to rely on the local MLS for market support.

Don’t take this as necessarily defending the appraiser in this case, but it has been my experience that a private sale that is significantly higher than other recent sales in the MLS, there is usually a hidden reason. However, if the sale was brought to my attention for consideration, I would probably give it some due diligence, and at least try to investigate it further. Simply stating a policy that these sales are automatically dismissed is a lazy rebuttal, in my opinion.

As far as any Fannie Mae or Freddie Mac guideline, I can save you the research. There is no such guideline other than to require that the terms be verified from a reliable source including concessions.

As far your conspiracy theory, I highly doubt that they are trying to keep you locked into your higher rate. If anything, it is in their best interest to keep you happy and keep your business. You do have the option to take your business elsewhere. Business is business whether it is banking or not.

Guest

Benjamin, thank you so much for writing such a detailed, insightful response. Much appreciated. If anyone else has the time and patience to review my case, here's something else I'd like to share with you in order to seek your opinion.

The appraisal company has used, in my view, some suspect reasoning to both justify their appraisal as 100% accurate and to dismiss comparables I thought more fairly represented the true value of my home. Tossing aside the conspiracy theory, perhaps a more plausible explanation for all this is that the appraiser simply wrote a bad appraisal and they don’t want to admit it was faulty (or, of course, another explanation is that I'm just wrong). Let me ask you this--how rare is it that an appraisal is submitted and later on is changed/altered after the home owner finds and suggests different/better comparables? Is admitting a fault in an appraisal and later changing it somehow a terrible thing for an appraisal company to do?

Please allow me to present an argument I've been making to the appraisal company in favor of a comparable I sent them. I won’t say the person’s name that responded, but she seems high up in the company—a “regional chief appraiser”—so apparently she’s no rookie. I’ll call her Mrs. X.

My home:
XXX Saint Cloud, FL 34771
4 beds, 2.5 baths, 1,660 sq ft
Lot 254,390 sq ft/built 1998

Here's the details on the third comparison used on my appraisal:
XXX Seth Road, Orlando, FL 32824
3 beds, 2.0 baths, 1,400 sq ft
Lot 204,731 sq ft/built 1985
Sold for $125,000 on 11/9/2009

Comp 3 isn’t in Osceola County where I live at, so the property taxes and schools are completely different. It’s much older and has a house and lot size smaller than mine. As I stated earlier, the CFE of Osceola County pointed out that the home had noticeable external damage to it such as broken windows and mold on the garage at the time it was sold. It was in really rough shape, thus the incredibly low foreclosed price for a 4+ acre home in Orlando. In my opinion, here was a more fair comparable to my home:

My suggested comp:
XXX Mathis Road, Saint Cloud FL 34771
4 beds, 3 baths, 2,146 sq ft
Lot 217,800 sq ft/built 1995
Sold for $191,000 on 12/11/2009

The Mathis property was a bankruptcy sale just like Comp #3, but this property is in the same zip code, city, county, school district and faces the same property taxes as other homes do in Osceola County--the complete opposite of Comp #3. Here’s what Mrs. X wrote to me when I asked her to explain why the Mathis property couldn’t be used as a comparable:

“XXX Mathis Road, Saint Cloud FL 34771 is located 10.4 miles from your property. It does have 5 acres but it appears to be appropriate for subdivision.”

By using a term like "appears to be", it sure seems that Mrs. X is guessing here--not 100% certain that the property is "appropriate for subdivision" or not...wouldn’t it be improper to dismiss a comparable based upon a guess? Ironically it doesn't matter because my property IS "appropriate for subdivision" according to Osceola County, plus I have more land. The point Mrs. X tried to make seems to be without merit, in my opinion.

Secondly, Mrs. X earlier responded to a complaint I made to the Better Business Bureau about my appraisal. Here's something of significance she wrote in the report:

"In market where values are changing rapidly it is imperative that the most recent sales be utilized."

The Mathis property sold on 12/11/09 whereas Comp #3 sold on 11/9/09. By ignoring the Mathis property, Mrs. X herself is going against a fact she stated as an "imperative."

Thirdly, Mrs. X sure seems like she’s using deception to make the Mathis property appear to be much further away than any of the other comps used on my appraisal. Comp #3 is listed at 6.11 miles away from my property—Mrs. X states that the Mathis property is 10.4 miles away. That makes it easy to dismiss the Mathis property as being way too far away to consider, but the 10.4 mile distance she stated is measured in DRIVING distances whereas the 6.11 miles for Comp #3 is measured using the MUCH SHORTER "as the crow flies" measurement. Here’s what Mrs. X told me about using driving distances in BBB report:

"It is more typical in appraisal reports to report 'as the crow fly' distances. Driving distances are not reliable as there may be more than one way to get to a property and some locations may involve circuitous routes which misrepresent the actual distances."

Mrs. X knew my appraisal was done by using the much shorter “as the crow fly” measurements—she’s the one who explained this to me. Yet, it seems like she tries to dismiss the Mathis property using a measurement she herself stated was “not reliable” and would “misrepresent the actual distances” between properties. If you use driving distances (i.e. Google Maps) then Comp #3 is 10.5 miles away--that means the Mathis property is actually closer if you measure the distance with the same standards Mrs. X used.

In addition to being closer, the Mathis property sold more than a full month later than Comp #3--something Mrs. X pointed out as an "imperative" when determining a comparable. The Mathis home is in the same city, county, zip code, school system and has the same Osceola County property taxes as my house—Comp #3 doesn't match any of that. The Mathis home is more similar to mine when you compare overall factors like its lot size, construction year, number of bedrooms and so on, especially when viewed against Comp #3. Despite all of this, the appraisal company, Mrs. X and the bank continuously denied using the Mathis property. Again, if this property was selected I would have been instantly approved for my loan.

I asked them all numerous times to explain the apparent discrepancies I found in Mrs. X’s rejection statement of the Mathis property. They absolutely, completely refused to address any of these points at all. Not once. And really, how could they? I think I really nailed them here, which is why I think they could not find any way to properly justify what Mrs. X stated. But I am persistent and continued to press them for an explanation, so three months later they then threw out the “it’s a private sale so it don’t count” defense. I still don’t understand how that can whitewash away the seemingly deceptive, original argument made by Mrs. X by stating this, and I still think they’re in trouble with their newest defense—if I find examples of private sales used on other appraisals that the company did, won’t that show that they’re making a false statement to me as a means of trying to cover for what Mrs. X said?

For goodness sakes, all I wanted was a fair appraisal of my home. Saying it’s value was only $145,000 was a crushing blow to our refinancing attempt and it was so completely wrong—again, I pointed out the 5 acre lot that sold for $177,500 as clear evidence that something was amiss with their appraisal price. Of course, they absolutely refused to address or explain how this smaller, empty lot, which sold on 01/13/2010 and was much closer to my home than either Comp #3 or the Mathis property, sold for $32,500 more than my bigger lot with a full house on it! And this is only the beginning—I presented many more comparables to them and they were all rejected. Aaaarrrrggghhhh! Why is it so unbelievably hard for them to admit that they may have made a mistake with their appraisal?

apexoffice · Posted: Fri Oct 29, 2010 8:46 am Post subject:

I admire your perseverance. In your lengthy, detailed responses, I am inclined to agree with you on several points. It does appear that in leiu of at least investigating the sale further and making a determination of inclusion in the report, they are saying that their opinion of value will not be changed. I have seen this several times where the appraiser feels they must defend their opinions at all costs. By attacking their values, and winning for that matter, also attacks their credibility and possibly their future career, especially since it sounds like a pretty large company if you are talking to a "regional chief appraiser". In fact, it sounds more like you are dealing with an Appraisal Management Company rather than the actual appraiser. If that is the case, good luck getting anywhere with them. That is a whole other beast of a problem.

Guest

This has all been a stunning lesson to me as to how badly damaged the real estate market has become. I presented volumes of other facts to the bank and appraisal company and everything was shot down. What government agencies can I turn to for help? Who regulates property appraisers in Florida and in other states? It kills me that they can get away with this--I don't care if it takes me till I'm 100, but I want someone to investigate this mess. If anyone has any suggestions as to who I should contact, please let me know. If not, thank you for reading my case and for your valuable advice.

apexoffice · Posted: Fri Oct 29, 2010 6:01 pm Post subject:

There are governing agencies that regulate appraisers, agents and the lenders. However, there appears to be very little that they may be able to do here.

You could contact the Florida Real Estate Appraiser’s Board and they will complete an investigation. However, the investigation will be based on the report as written. It will contain a technical review of the report for factual errors and evidence of fraud. They will not take any action regarding the selection of comparables or the opinion of value, with the exception being a result of errors in the report or fraud. They may look into comparable selection and opinion of value if and only if there are significant financial losses as a result of an appraiser’s poor judgment. In this case, there is no loan yet, so there is no financial loss.

Keep in mind that an appraisal is just an opinion, and implicit in that opinion is the selection of comparable properties also. Consider if you went to a doctor and you did not agree with their opinion, or maybe you just want to be sure. Do you spend time trying to argue with the doctor, or do you go to another doctor and get a second or maybe a third opinion? Appraising is a similar profession in that we must analyze and interpret data to develop opinions and conclusions. It is more art than science. As a result, it is quite possible that we can be wrong sometimes. Just something to think about.

Guest

Awesome--I'm going to look up the Florida Real Estate Appraiser’s Board today.

And to your second point, it's definitely something to ponder. I guess I'm upset over the way I was treated and how unfair the process has been. I sent the bank an eight page letter full of details as to why I thought the appraisal was wrong. You know how they responded? They sent me a photocopy of my original mortgage contract with them from five years ago--nothing else. That's the one thing I didn't ask for! They didn't even attempt to address a single concern I had. What a slap in the face. Was anything in my letter valid? I believe so, because I sent the exact same letter to Congressman Posey and only then did the bank turn things around and offer me refinancing after his involvement. Maybe this is an isolated incident, but in case it isn't I hope others can learn a little bit on what to do if they find themselves staring at a questionable low appraisal.

You guys are great! Thanks for restoring some faith in the appraisal business back into me.

gmakerley · Posted: Wed Nov 03, 2010 11:18 am Post subject:

It's been a few days since I've been able to view all of what's happening here, but I appreciate that Benjamin stepped in with his expertise and provided additional insight.

One thing that I noted in your 1:38 PM post on 10/28 you indicated that the bank "owned" the appraisal firm that did the inspection and analysis. This would be so far out of whack that I find it incredible; but I believe that Benjamin's reference to a management company (which could well be owned by the lender) made sense of it. I suspect, from all this, that he's right.

I do find it odd that the other property would have been dismissed out of hand, without some indication beyond what they gave you.

I'm quite sure that the bank's habit of handling situations such as yours is standard fare; if they're truly sold on customer service, they'd have checks and balances in place to ensure that service was truly being performed. In this case, if they could only figure out to send you a copy of your mortgage contract, that's a pretty good sign that they don't take the concept of service very seriously.

I wish you well in your quest. Given the amount of homework you've done with the (not at all surprising) attention it's been given by the lender, I hope you can get some satisfaction out of all this.

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