Should I Dispute My Appraisal for my Re-Fi?

i purchased a home in 2009 that appraised for $225,000. the property is located in a desirable neighborhood in lafayette, la. lafayette is a booming community that was/is impacted very little by the slow economy nationwide. just recently lafayette was listed as the second fastest growing economy in the country by bloomberg and was recently featured with cnn finance. the house that i am writing about was built in the mid 1980s and had very little upgrades since then. as you might imagine, a home built in the 1980s is in dire need of upgrading in the 2010s. when we made the decision to purchase the home we planned to make some improvements to make the home more desirable and to improve our quality of life. the home is one of the older homes in the neighborhood. there are homes as new as 5 years old with all of today’s amenities.


with the very attractive interest rates of today we decided that now was as good a time as any to do some remodeling. so, we made a list of improvements that we wanted to make and see what kind of budget we might be looking at. we identified that the improvements would cost about $60,000. since the house appraised for $225k in 2009 and we owed $140k we thought that we should be in good shape from the standpoint that there may be some appreciation over the past 3 years plus the added value from the $60,000 remodel. we knew that we would not see all of the money in the new appraisal that we invested in the project but we speculated that we’d see ¼ to 1/3 of that investment in added value. i thought that was a fair assumption. this would allow us to refinance 80% of the new appraised value to take care of the improvements. boy were we wrong!



the new appraisal came in at the exact same price that we paid for the home before improvements in 2009 which was $225,000 as noted earlier. this was a major shock to us. again, we knew that we would not see all $60,000 but we figured that there would be some value for the improvements. the $60,000 was well spent. it was spent on all of the desirable items of a new construction such as granite counter-tops , stainless steel appliances , wood floors throughout, a completely gutted and remodeled master bathroom with granite, whirlpool tub, etc. , and other miscellaneous improvements. an outside workshop was also constructed on a concrete slab with shingled roof which alone should have increased the value .



when the appraiser came it was in the evening. he wanted to come after it cooled off since it was a hot day. my wife and i agreed that he went through the house very quickly. i wanted to point out some of the improvements but he was not interested in hearing anything that we had to say. we had a bad feeling about the appraisal after he left. on the comps he used 2 dated comps of homes in less desirable neighborhoods than ours. the 3rd comp was from our neighborhood which would be a good thing but it was a foreclosure. the appraisal is causing us some major issues with our re-finance in that we are not able to borrow enough to carry all of the cost of the improvements made. we need the house to appraise for $245k to cover the cost of the improvements. that's $20,000 more than where we are today. not in our wildest dreams would we have thought that this appraisal would have reflected zero increase in value. we were hoping for $20,000 but at this point i'd take anything!



my question is, should we dispute this appraisal? do we have any ground to stand on? or are we wasting our time and should focus on figuring out how to pay for the improvements such as making a side loan? we are still in shock over this. i would have sold the house as is and built a new house or an existing house with updated amenities had we known that this kind of investment would not have given us a single penny in increased value.



thanks for any advice you can provide!

paul