I work for an appraisal and title management company, so I deal with this kind of thing every day (we are the middleman between the lender/bank and the buyers/sellers).
First of all, I’m sorry this happened to you. We do see things like this happen every so often, and it sucks, especially for the buyers, but the reason behind appraisals is this: before the mortgage bubble burst in 2008/2009, mortgage brokers were doing really dirty business – for example, selling a house that’s only worth $100,000 for $500,000 so they could make more of a commission. They’d “pay off” the appraiser to have them appraise the house at a certain price, even if it wasn’t worth that price. Then the seller’s would have this huge mortgage, the market would decline, and they’d be stuck paying a gigantic mortgage only to find out their house is NOT worth that much. Then they’d either default on their mortgage or end up selling it for less than half what it was worth.
So this whole annoying process is to protect you AND the lender.
Anyway, if you are really set on this house, I would probably get another appraisal. BUT here are a few things to remember:
1) appraisers have to abide by USPAP (Uniform Standards of Professional Appraisal Practice). Basically this means that they have to remain a neutral party when it comes to appraising a home. They can’t let anyone influence their final product. And they have a giant set of rules and regulations they have to follow when they put an appraisal together. It’s not just an “opinion of value.” That “opinion” is based on SO many concrete things – improvements, neighborhood, the market, square footage, room count, etc, etc, etc, etc. This is why an appraisal is at least 10 pages long. There really is a lot of data that goes into determining a home’s value. So it’s VERY rare that an appraiser botches an appraisal.
2) If you get a new appraisal by a new appraiser, it COULD come in higher – but not necissiarly as high as you “need” it to be to get the loan. Remember, an appraiser’s job is to determine what the house is worth – not what it’s selling for.
3) If you do request a new appraisal (or if you have the first appraiser revise their report), you have to have clear and specific data to prove your point that you (and/or your realtor, the banker, etc) believe he house is worth more. You might suggest comparables (or comps), which are other homes in the area which sold recently (usually within the last 6 months and are about a mile from “your” home). But keep in mind that just because a house looks similar to you, doesn’t mean it is. Again, there are TONS of factors that go into determining a homes’ value, and just because the house next door sold for $200,00 more than yours doesn’t make it a comp.
Again, if there’s any CONCRETE data that you, your realtor, and/or the lender can come up with, go back to the AMC (appraisal management company) and file an addendum or an appeal.
But it just can’t say “we disagree and think the house is worth more.” You have to be specific in regards to the features of the home, the market, the neighborhood, etc.
So maybe try one more time – but remember, even if the new appraisal is higher, it still might not be high enough for you to get the loan. If this is the case, I’d leave it alone. If the home is listed for that much and TWO appraisers have much lower appraisals, they are actually saving you tons of money and the nightmare that comes with paying too much for a house.
Good luck! And feel free to PM me if you have any questions – this industry is CRAZY complicated and nothing is ever black and white.
It’s especially hard for a buyer to understand because, after all, this is your home we’re talking about!