Posted on: 21st Dec, 2010 08:14 pm
Here’s the scenario: it's fall of 2009.
Obama’s [extended] tax home loan credit causes a 'Frenzy' in an otherwise depressed housing market. Folks are aggressively overbidding on foreclosure properties. after losing out (being outbid) on four different properties and driving over 9000 (yes nine thousand) miles looking at properties in a span of eight months my wife and i decide to offer a 'bit more' than the list price in hopes of bringing the ordeal of finding a home to a close.
January 2010, ‘Listing price’ on the home is 175. We offer 180 with request to finance 140k.. We are pre-approved. The home inspection goes reasonably well with no big surprises. The banks’ appraisal is the only remaining contingency. Appraisal comes in (March 2010) with two figures, one at 190k the other at 230k with the variance based on ‘approach’. With the ‘low end’ well above our loan request the bank is happy; with it above our offer we are happy; bank agrees to underwrite and we close.
Six months pass. Tax bill arrives. Value of home and property by tax assessor set at 165k. First thought is ‘wow, market is really crashing’. Second thought, I guess this is good since my taxes will be lower and valuation not really important unless and until I want to sell. Then I get to wondering about how and when this valuation was arrived at so I call the tax assessor’s office and things ‘hit the proverbial fan’ when I learn that the appraisal was based on comps and a visual inspection of the property two months before the contract was written (meaning in December 2009) and three months before the appraisal was performed by the bank (March 2010). Bear in mind that this all happened in a market where the values/prices were constantly falling.
So my question is this: how is it that the bank’s appraiser could have possibly valued the house at 230k months after the tax assessor’s office had valued it at only 165 in a declining market?
Clearly it was in both the seller and lender interest to have the appraisal come in higher or we would have walked away or insisted on a reduction of sale price.
My wife and I are really feeling played here and are considering suing the banks appraiser for manipulating the valuation.
Can anyone help provide a perspective on this which will help me see what appears to me to be a very serious integrity problem in a more positive light?
Obama’s [extended] tax home loan credit causes a 'Frenzy' in an otherwise depressed housing market. Folks are aggressively overbidding on foreclosure properties. after losing out (being outbid) on four different properties and driving over 9000 (yes nine thousand) miles looking at properties in a span of eight months my wife and i decide to offer a 'bit more' than the list price in hopes of bringing the ordeal of finding a home to a close.
January 2010, ‘Listing price’ on the home is 175. We offer 180 with request to finance 140k.. We are pre-approved. The home inspection goes reasonably well with no big surprises. The banks’ appraisal is the only remaining contingency. Appraisal comes in (March 2010) with two figures, one at 190k the other at 230k with the variance based on ‘approach’. With the ‘low end’ well above our loan request the bank is happy; with it above our offer we are happy; bank agrees to underwrite and we close.
Six months pass. Tax bill arrives. Value of home and property by tax assessor set at 165k. First thought is ‘wow, market is really crashing’. Second thought, I guess this is good since my taxes will be lower and valuation not really important unless and until I want to sell. Then I get to wondering about how and when this valuation was arrived at so I call the tax assessor’s office and things ‘hit the proverbial fan’ when I learn that the appraisal was based on comps and a visual inspection of the property two months before the contract was written (meaning in December 2009) and three months before the appraisal was performed by the bank (March 2010). Bear in mind that this all happened in a market where the values/prices were constantly falling.
So my question is this: how is it that the bank’s appraiser could have possibly valued the house at 230k months after the tax assessor’s office had valued it at only 165 in a declining market?
Clearly it was in both the seller and lender interest to have the appraisal come in higher or we would have walked away or insisted on a reduction of sale price.
My wife and I are really feeling played here and are considering suing the banks appraiser for manipulating the valuation.
Can anyone help provide a perspective on this which will help me see what appears to me to be a very serious integrity problem in a more positive light?
Hi TanChienWu,
As far as I know, appraisal of property for tax purpose and mortgage purpose have different criteria. You should have a word with an attorney and discuss your case and then you should decide whether or not you should sue the bank's appraiser.
Thanks
As far as I know, appraisal of property for tax purpose and mortgage purpose have different criteria. You should have a word with an attorney and discuss your case and then you should decide whether or not you should sue the bank's appraiser.
Thanks
I would not place too much weight on the tax assessors valuation. I am not sure about your market or the practices of your tax assessors. What I know from the Atlanta area is that tax assessors values are typically on the low end of the market. This prevents homeowners from bombarding them with requests for reconsideration of value to lower their property taxes. In Georgia, we are also assessed at 40% of the market value, so if the market value of the property is $100,000, the tax assessment will be $40,000. Tax assessors also use a mass appraisal method for determining value, not a direct sales comparison which is a much more accurate approach. These are just some things to think about and maybe ask more questions.
If you are still concerned that the lenders appraisal is too high, I would advise discussing the matter with another appraiser of your choosing. They can review the appraisal and let you know if the value is reasonable. The fee for this service will vary but I would suggest looking for an appraiser with litigation support experience, just in case.
If you are still concerned that the lenders appraisal is too high, I would advise discussing the matter with another appraiser of your choosing. They can review the appraisal and let you know if the value is reasonable. The fee for this service will vary but I would suggest looking for an appraiser with litigation support experience, just in case.
apexoffice,
thanks for the advice. just FYI, when i asked how the assessor performed the appraisal and about reductions/percentages i was told that the apraisals are 'real world practical' assessments based on actual comps (comps that the appraiser must also have actually VISITED) and that there is NO percentage/reduction applied. this is why i was set off after my conversation with them. this suggested to me that the numbers should have been much closer if these things are anything more than subjective guesses...
my fie and i are discussing the options now and are considering hiring another appraiser to review the process and give us some guidance.
thanks again.
thanks for the advice. just FYI, when i asked how the assessor performed the appraisal and about reductions/percentages i was told that the apraisals are 'real world practical' assessments based on actual comps (comps that the appraiser must also have actually VISITED) and that there is NO percentage/reduction applied. this is why i was set off after my conversation with them. this suggested to me that the numbers should have been much closer if these things are anything more than subjective guesses...
my fie and i are discussing the options now and are considering hiring another appraiser to review the process and give us some guidance.
thanks again.
As noted above, appraisals for purchases and a mortgage are different from appraisals done by towns to establish a base for property taxes.
If you get a new appraisal on your own, same kind of appraisal as done for your purchase, do not show it to the town if it comes out higher than the town appraisal. They may raise your taxes.
The appraisal done for your purchase was done according to Home Valuation Code of Conduct guidelines and was reviewed by underwriters and lenders. If it passed everybody, it means to me that the comparable properties and all the adjustments were proper.
To me , your suspicion that the appraisal for purchase was inflated is completely unfounded and a waste of your time and money to pursue checking it out any further.
I say this because you are not comparing apples to apples. You are thinking maybe the purchase appraisal was inflated because you are comparing that value to a town value used for tax purposes that is lower and one has nothing to do with the other and they are two diffrernet processes.
If you get a new appraisal on your own, same kind of appraisal as done for your purchase, do not show it to the town if it comes out higher than the town appraisal. They may raise your taxes.
The appraisal done for your purchase was done according to Home Valuation Code of Conduct guidelines and was reviewed by underwriters and lenders. If it passed everybody, it means to me that the comparable properties and all the adjustments were proper.
To me , your suspicion that the appraisal for purchase was inflated is completely unfounded and a waste of your time and money to pursue checking it out any further.
I say this because you are not comparing apples to apples. You are thinking maybe the purchase appraisal was inflated because you are comparing that value to a town value used for tax purposes that is lower and one has nothing to do with the other and they are two diffrernet processes.
you got 2 values??? 1 obviously had to be the sales comparison value, the other the cost approach.
I don't know your market. here in Michigan values have showed steady declines since 2006-2007. In michigan, if an SEV (state equalized value) is 75,000 the Assessor is saying it's worth double...or 150,000. Most tax assements in Michigan are high but here we are taxed on taxable value which could be different than SEV. If the assessor REALLY is saying the proeprty is worth 165,000 and you're being taxed on that...be happy!
I don't know your market. here in Michigan values have showed steady declines since 2006-2007. In michigan, if an SEV (state equalized value) is 75,000 the Assessor is saying it's worth double...or 150,000. Most tax assements in Michigan are high but here we are taxed on taxable value which could be different than SEV. If the assessor REALLY is saying the proeprty is worth 165,000 and you're being taxed on that...be happy!