Bad appraisal costs bank big bucks - From InmanWiki tells the story of a borrower's experience with applying for a mortgage on a new home purchase and then being told that the appraisal was $23,000 less than accepted price.
According to the purchaser: "Phone calls to the appraiser and the bank loan officer did no good. So we applied for a mortgage with my wife's credit union (where she has a small account). They sent out their appraiser who confirmed we got a bargain purchase price. Our new mortgage approval, including the appraisal, took only three days for what turned out to be a better mortgage. As a result, I pulled our company multimillion-dollar accounts from that "big bad bank" which lost our business due to a bad appraisal."
You are so right that appraisal is an art, not a science. How can two experienced, licensed appraisers be $23,000 apart on their appraisals of an upscale home in a subdivision of similar houses? – Robert T.
I don't always agree with Bob Bruss but I do semi-agree with his advice:
"You did the right thing to first phone the appraiser to see if he made a mistake and then phone your bank loan officer. He should have requested a "review appraisal" to double-check the appraiser's work."
In my opinion, Bob's advice should have been for the borrower to first call the Loan Officer and let the "Bank" talk with the appraiser. After all, it's the bank that ordered the appraisal and they are the intended user of the report. The loan officer or underwriter will have a copy of the report and they can discuss it, item by item, with the report in front of them.
As appraisers, we should always be willing to discuss our appraisal reports with the client. We should be willing to consider additional sales information and correct any errors quickly.
Where Bob B. and I part company is in his agreement that the borrower contact the appraiser directly to discuss the appraisal.
What do YOU think? Let us know.
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