I'm hoping that someone can help or give some advice to this question. I live in Texas and am in process of obtaining or actually trying to close on a Home Equity loan. The appraisal was completed by a certified appraiser and provided to the lending company. They sent it to "someone" in Irvine, CA who accepted it with the stipulation that the appraiser find a different comp that was on peir and beam (like our house) instead of concrete slab. The original comps were very similar except for this difference. The appraiser immediately provided another comp as requested but the other ammenities varied to much and they rejected it still. The appraiser sent them a written statement that although there were other like properties in our area he was having difficulty finding one that had recently sold, but that the difference in foundation would not affect the market value in our area. The reviewer still rejects this and wants to cut the value by $18,000 and has yet to provide the basis for their value opinion, other than - in their area (CA)- it would make a difference in market value.

Don't they have to have to provide a reasonable basis on which they formed their opinion of value and isn't a market value supposedly for your market not a market 2000 miles away? And why, if they seem to think the original appraisal in so inadequate would I have to pay for it? Do I have any way to get this resolved and what am I entitled to as justification of their stated value? This would cost me $14M cash out!

If you haven't already paid for the appraisal - go find another bank that is local so you don't have to deal with anyone in CA. If you have already paid for the appraisal, accept the lower amount, sign the documents, then rescind the transaction within the first three days which will require them to give you all of your money back (every dime) that you have paid them. Then go to a local bank and start over.

Thanks Randy -

I really hate to start over but that is probably the best advice and I had already considered doing so. I hadn't thought about recinding, which could be kinda fun - cause then they would have to "eat" the fees! An arbitrator is now involved and I have told them that I want the detailed basis for their adjusted value and that it needed to based on this market. They might be able to justify some adjustment - but $18,000 - I don't think so! My husband has been in the construction industry in this area for 26 years and he says there is no way the foundation type would make that big of a difference. There is a fairly new sub division not too far from us where all of the homes are rustic and built on peir and beam just like ours - these homes originally sold for around $200M and up. The appraiser said there had not been a sale recently enough for him to use these as comps. Our value was $148 and now they want to cut it to $130.

Another note -

They did try to say that it was because this type of foundation could shift, unlike a concrete slab. My husband reminded them that it is much easier and less expensive to adjust a house that had shifted than it was to repair a "cracked slab" when a house was sitting on top of it -

You are really over a barrel, as the bank really has the upper hand on how they can choose to value the property. If they want to play games - I would play right back and hit them in the pocket book and make them eat this whole deal. Arguing about $18,000 on a residential appraisal in these markets is asinine - $100K or more maybe. Somebody has too much time on their hands at this bank and someone above them is asleep at the wheel.

You are going to love hearing these words Anon...

The review appraiser is in violation of USPAP.

Let me tell you why (this is so much fun!):

In the course of an appraisal review, the reviewer can accept or reject but CANNOT give an opinion of value. In doing so (an adjustment to value is considered the same as giving a value because we can all subtract)...s/he has committed an appraisal. In performing an appraisal, an appraiser must adhere to USPAP Standards 1 and 2, and there's a chance that's been skipped because that's a lot of work.

You will want to look at the reviewer's credentials at www.asc.gov. Click National Registry / Standard Query / Appraiser by Name. You will be able to see all the states in which s/he is certified/licensed. If s/he is not credentialed for your state, drop what you are doing and do the happy dance. An appraiser can review a property located anywhere as long as s/he is certified in the state in which s/he is sitting while doing the review, but an appraiser can't appraise in a state if a cert for the state is not held. I'll bet you a smiley face the CA appraiser doesn't hold a TX cert.

Additionally, whether in appraising or reviewing, the competency issue of USPAP must be met. Sounds like the fact that the reviewer is basing an opinion on non-TX market standards, there's a lack of knowledge of the market in which the property is located, ergo, incompetent.

Also, many states have a rule that if you are appraising a property, you must inspect. Check and see if TX is one of those states. If s/he didn't inspect, tada!

Then report the appraiser to www.asc.gov, TX, CA, and, if applicable, the Appraisal Institute (www.appraisalinstitute.org).

And definitely do the rescind thing. That sounds like fair trade. Actually...get your copy of the appraisal and whatever the reviewer has provided in support of his/her recommendation of adjustment, and do that before you rescind because then you have a hat trick: the ammo, the gun, and the a recision party.

Let the games begin.

Oops...one more thing. If the bank has accepted the appraisal and review and transacts business on the new value, they are in violation of Federal Regs because they have to be in compliance with USPAP. Call your local Federal Reserve office.

C'mon...stop grinning.

Link to USPAP

Thank you Appraisal Lady. I had already started researching this website and thought this was the case. I am defintely going to bring this up with the lender. Everything was going well until this. Our property is somewhat unique, but this is the third time we renewed our home equity in the last 8 years and we've never had this problem. The appraiser has just always made the necessary adjustments. These people want a home exactly like ours within 1-2 miles of us that sold within the last 6 months. I know that is standard, but that's pretty unlikely in our case. They now have 4 comps. Some valued higher and some valued lower and they are still saying they are all unacceptable. They finally took one of the comps that is about mile from us but the only similarity is that it is on pier and beam. It is 30 years older, 800 sq feet smaller and is not nearly as attractive. It was valued much less than ours so the appraiser listed the adjustments and supported his value. When I asked for the basis of their value, they claimed that they used this comp and found the certified appraisers adjustments were questionable and felt it was more likely valued at $130 instead of $148 - that was the extent of their reasoning. They rejected the last comp he sent that was valued at $180 because it was 4 miles from us and sold last year. They don't understand, TX is not like CA where you can touch your neighbors house just by sticking your hand out the window. We live on 5 acres of land that is surrounded by more land and the houses in this area range from mobile homes to big beautiful ranch style homes on a farm. All of our houses do not look just alike.