An irritating appraisal issue

As discussed yesterday, we’ve recently run into some issues with appraisals.

The most irritating issue is a deal where the appraiser has totally botched his estimate of market rent for a vacant unit in the subject property.

The unit is an 800 sq ft, 2 bed / 1 bath, standalone house with parking in Mid City. In decent condition, the unit gets $1700-1900 all day.

The appraiser has it at $900.

This wouldn’t be a big deal, except the missing rent is screwing up the “stand-alone” calculation, which is what FHA uses to try to make sure that the rents on a property are high enough relative to the mortgage payment to provide security against default by the borrower.

We’ve obviously provided about a million comparables to the appraiser and the bank in order to try to get them to raise the estimated rent for the unit and thereby have the deal work.

However, appraisers generally get paid a very low flat fee per transaction ($300-400!) and are therefore totally uninterested in doing any extra work, particularly when it makes them look bad.

Sure enough, the appraiser on the deal has been pretty difficult about changing his number, even though he’s wildly off.

Eventually, we’ll get him or the bank to see reason. But it’s incredibly frustrating to feel like a deal that we’ve worked so hard on is being held hostage by someone who does not give a flying you-know-what about getting the numbers right.