Why Friendly Appraisers Should NOT Push Values Too Far; Review Appraisers Are Like Sharks


    Several years ago, we had a $700,000 purchase of a property with an unpermitted in-law unit in Concord, CA (very common in both our Bay Area and Austin markets). There was 1,600 square feet of permitted (legal) space and an additional 800 square feet of unpermitted space (the in-law unit).

    The “market” recognized the unpermitted space, but our poor appraiser could only use comps that were close to the 1,600 square feet size (per appraisal guidelines) and there was very little data to support our purchase price.

    Our appraiser gamely tried to support our purchase price with a very long and complex appraisal, but our underwriter pulled her own data for the neighborhood and called for a formal appraisal review by another appraiser.


    Some review appraisers are like sharks; once they smell blood (a pushed value), they go crazy with their fault-finding and they often cut values significantly. And that is exactly what happened with our above transaction; the value was cut by $125,000 and the transaction died altogether.

    The sad and frustrating irony was that the buyers had extra cash; if the appraiser had come in $35,000 to $40,000 under contract price from the start, the underwriter probably would have never called for the review and we would have closed …. and lived happily ever after.

    The other sad result was that the underwriter started to scrutinize and question ALL of the appraisals we received from that appraiser.

    I touched on this topic in yesterday’s blog, but am doing so again today b/c this issue surfaces so often and b/c it is so important!

    Good appraisers will always correlate to the higher end of the range supported by the available comparable sales data.

    But, if they go outside the range or outside of appraisal guidelines, they will invite reviews that often end in massive cuts to value.

    This is not to say that we don’t rebut our appraisal cuts (we always do), but once a seasoned review appraiser has spoken it is often very difficult to get anyone to change their minds.

    Jay Voorhees
    Founder/Broker | JVM Lending
    (855) 855-4491 | DRE# 01524255, NMLS# 310167

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