Refinance appraisal-Too Low - Posted by James B.-Chicagoq

Posted by James B. on November 21, 1998 at 17:53:19:

Actually, the appraisal will cost me $0 if I close with this bank. It is a no-cost re-finance. The way it works is that I paid for the appraisal and credit report ($300) total, and then at closing the bank gives me that money back. So I guess I can’t really complain too much.

Refinance appraisal-Too Low - Posted by James B.-Chicagoq

Posted by James B.-Chicagoq on November 21, 1998 at 16:30:52:

I am in the process of refinacing my SFH (122K). I am a Realtor in the area and I got comps for the lender’s appraiser. The homes in this area all are very similar in style. In fact,the house across the street just sold for 157K. According to the comps, the average selling price is 152K. I bought the home 1 year ago for 135K and it appraised at that time for 140K. I have put about $500 worth of work into the property. All in all, I feel that the property should have appraised for 150K min. Instead it appraised for 145K. This is significant becasue now I have to still pay PMI (although $20 less). The bottom line is that it seems as though the appraiser appraised the home just above the 80%LTV in order so that I still get to pay the bank’s PMI. I am upset. Am I wrong in assuming that the appraiser did this because he is working for the bank?
Would the bank accept an appaisal from an independent appraiser that I hired?
James B.-Melrose park, Il.

Re: Refinance appraisal-Too Low - Posted by Paul

Posted by Paul on November 22, 1998 at 20:28:44:

I am an MAI and a bank appraisal review officer. First, I doubt if the appraiser intentionally came in low so the bank could collect PMI. I’d suggest you ask the bank about using another appraiser. However, govt. regulations require that the bank engage the appraiser. They should maintain a list of “approved” appraisers that they may let you choose from. I can’t recall what you said your LTV worked out to be, but there are different levels of PMI premiums depending on how much greater your LTV is over 80%. Find out what your PMI premium is and compare it to the cost of getting another appraisal. You might as well do it now if you are allowed, rather than wait a year or two (after paying PMI) and then paying for an appraisal to have it removed at a time when you are sure the appraisal will be high enough. Good luck.

Re: Refinance appraisal-Too Low - Posted by phil fernandez

Posted by phil fernandez on November 21, 1998 at 16:46:33:

I am not an appraiser however being in the real estate business for years I would say that the appraisal situation is not an exact science. If you got 3 different appraisers to appraise your house you would probably get 3 different values. Although the 3 values would in all probability be within a certain range.

The $145,000 appraisal you got instead of the $150,000 value you were expecting , to me would be within a reasonable range. Saying that take a close look at the appraisal to see if any of the appraisers calculations are off.

I doubt that the appraiser came in low so that the bank could still charge you for PMI. Ask the bank if you can get another appraisal that they would accept. Is your cost of another appraisal going to offset the small PMI monthly payments?