We had a similar experience last year. We were trying to refi, and the closest comp was a trashed foreclosure down the street (same floor plan) that sold for $15k less than we paid for ours. Because of that, the appraisal came in low, which meant we would have to bring a little cash to the table. It wasn’t much, but it was money we’d rather spend on something else.
We had made the mistake of going with the same lender who held our current loan.
I wrote a letter that took apart the appraisal bit by bit and made the appraiser look incompetent. I used five comps instead of three, formatted the same way they did, careful to use actual appraisal rules (some of which they ignored) taken from my recent real estate class textbooks. For example, I pointed out that one of the three comps they used backed to a street, while our house backs to a private park. They had made no adjustment for the location. I also contacted the buyer’s agent of the foreclosure and found out how much the buyer had to invest to get it into livable condition ($20k, doing most of the labor themselves). The lender dismissed the letter without a good reason.
We were kind of stuck, as it wasn’t worth it to us to lose the money and time invested so far, and the extra money we would have to come up with would just lower the loan amount (and therefore the payment) anyway.
Maybe I’m reading too much into it, but everything pointed to them going out of their way to deny us the refi. Even the customer service, waiting periods, red tape, etc. were a much worse experience than they were when getting the original loan, when they bent over backwards to make us happy. There is no doubt in my mind that an appraiser hired by another lender would have come up with a different number, or at least would have taken my contrary evidence into consideration.
I wouldn’t follow the guy around or be otherwise annoying. I had talked to our appraiser before he wrote his report, and he knew that the foreclosure was trashed – but they (or at least this particular one) do not take that into account. If it turns out to be inaccurate, just contest it, and maybe you’ll have better luck than I did.
