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Property value reduced after challenging appraisal

Posted on: 12th Feb, 2010 01:50 am
I feel my query is unique and thus I've decided to start a new thread on it. Hope I could get an opinion about my situation.

I have a few acres of undeveloped land with a great view of the surrounding countryside. I'm trying to get a construction loan from one of the local banks. Well, when I contacted the loan officer, she ordered for an appraisal of the property. But to my surprise, the appraisal came $7,000 less than what we have expected it to be. Another important fact was that the comps used were nothing like my property. I had challenged the appraisal. I received a new appraisal 2 days ago and I'm dumbstruck. The property was reevaluated $22,000 less than the original. How is this possible? Was I wrong in challenging the appraisal? Also, is it possible for me to file a formal complaint with someone?
Welcome Carmel,

What I can advice you in this regard is that you can order an independent appraisal to verify the value of your property. If you are sure that the appraiser has violated the standards, then you can file a complaint with the Appraiser Licensing and Certification Board of your state.
Posted on: 12th Feb, 2010 08:35 pm
Hi Carmel,

One of the biggest challenges for land appraisals, these days, is finding good land sales which can be used in an analysis. Since construction has nearly halted in most areas, so are sales of vacant land for development. You stated that the appraiser used comps that were nothing like your property; well they may have been the very best available, or at least the best available which met the lenders guidelines for proximity, time, etc.

As far as the difference in the two appraisals, it could just be a difference of opinion in the interpretation of the data. It doesn't mean that either are wrong and no one would ever know the true market value until the property has been exposed to the market and offers are made.

Now, I may be off base and you did get some bum, incompetent appraisers which were the lowest bidders for the assignment. In that case, formal complaints can be made to the state appraiser's board. However, when you make the complaint, you need detailed, specific data explaining your position why the appraisals are wrong. You can't just say "they were lower than we wanted". You will basically need to prove that the appraisal was fraudulent and there was intent to mislead you or you need to prove gross incompetence. The board will not investigate a minor difference in opinion for comparable selection.
Posted on: 13th Feb, 2010 07:21 am
Hi Carmel,

I suppose one of main reasons why the appraisals were less than what you expected was the unavailability of comparable lands of similar kind. Probably there were not many such lands, which could be used as comparables for the appraisal, in the locality. This is why it seems your property was appraised at a lower value. You can order an independent appraisal, but until the market improves and there are similar comparable lands in the locality, you may not get a higher appraisal.
Posted on: 23rd Feb, 2010 11:03 pm
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