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Value Is Clear But Comps Are Not; Defense of Appraisers

We recently had a refi client whose house was unequivocally worth over $800,000. We knew this b/c his neighbor’s near-model-match home was “pending” at $805,000, after being on the market for less than a day.

Our refi client needed a $750,000 appraisal to obtain the ARM financing he desired, but we could not come close to getting that appraisal. This was very frustrating for our client b/c he knew that if he put his house on the market to sell, he would get offers well over $800,000. But again, there was no way for us to get an appraisal over $750,000.

The reason is that appraisers have to employ “bracketing comps” (comps that sell for more than the subject property), and they are subject to other very tight appraisal guidelines that we have discussed before. These guidelines also prevent appraisers from correlating to Pending Sales (like the neighbor’s).

There were simply inadequate comparable sales to support the subject’s true market value. This makes no sense, we realize, as appraisers are supposed to estimate “market value.” But sometimes appraisers’ hands are simply tied by guidelines and a lack of adequate data.

The good news in the above story is that the neighbor’s pending sale will provide the perfect comp as soon as it closes, and we can get our client the refi he desires.


Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646