Can I make a formal complaint about an appraiser

[wendlan]

Can a formal complaint be made about an appraiser who did a horrible job? Our closing is 2 weeks away. Made our offer,had an inspection,seller made repairs from the inspection and appraisal was done. Our offer was 1k less than appraised price that the seller had done in March with seller paying 6% closing costs. Appraiser goes out and appraises the house $11k less using poor comps. Our buyers realtor knows the area very well and offered our loan officer an explanation of why the appraisers comps were not accurate and provided appropriate comps and the full appraisal from March. The appraiser said he refuses to look at them and will not change his appraisal. Bank will not allow a secong appraisal,deal about to fall through. This appraiser has a reputation for doing just this to others as well. Also he made a huge list of stuff to be painted that is unreasonable and no peeling paint seen. Seller did all the painting and got rid of bees in the shed anyway. My question is after this deal is cancelled or finished how do I go after this appraiser? He does not deserve the money he was paid and should have to answer to someone!

[Anonymous]

So why do you think the appraiser wants the low ball the house?

[Lemmus]

...iirc the bank has to order the appraiser from a list provided by the appraisal professional org ...dont recall the name ...thus its an arms length transaction ...but if the appraiser is incompetent ...or has a beef with the bank or the realtor ...or even the previous appraiser ...you're caught in the middle ...I would assume you can complain to the professional org and to the state licensing agency

[Anonymous]

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@Lemmus wrote:

...iirc the bank has to order the appraiser from a list provided by the appraisal professional org ...dont recall the name ...thus its an arms length transaction ...but if the appraiser is incompetent ...or has a beef with the bank or the realtor ...or even the previous appraiser ...you're caught in the middle ...I would assume you can complain to the professional org and to the state licensing agency

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I think you are looking for HVCC.

[Lemmus]

...gag me with a maggot ...that is stupidly complex ...imnsho of course 

[wendlan]

I have no idea why he would want to make a low appraisal except that he has been doing this alot recently in our community to others as well. Maybe just an a--hole. Maybe doesn't want to admit he was wrong. He was assigned through a clearinghouse. I paid $480 so far and then he gets 100 more every time he goes out to recheck things. Believe me I don't want to pay more than the house is worth and my realtor doesn't want me too either, but we don't believe that is the case.

[StartingOver10]

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@wendlan wrote:

I have no idea why he would want to make a low appraisal except that he has been doing this alot recently in our community to others as well. Maybe just an a--hole. Maybe doesn't want to admit he was wrong. He was assigned through a clearinghouse. I paid $480 so far and then he gets 100 more every time he goes out to recheck things. Believe me I don't want to pay more than the house is worth and my realtor doesn't want me too either, but we don't believe that is the case.

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We are having those same kind of issues in our area.  Let me explain a few things to you that impacts the appraisers (dpeezy alluded to it above).  What you are referring to when you say "clearinghouse" is really an AMC (Appraisal Management Company) that assigns appraisers.  What you might not know is that most of the AMCs are actually owned by a bank (either partially or wholly in a subsidiary) and that AMC collects a huge percentage of the fee you think goes to the appraiser (40% is common). 

On top of that, the lender can actually reject individual comps the appraiser uses in the appraisal and tell the appraiser to use other comps. It is becoming such an issue in our area that as agents we have to address it in our negotiations. eg If the appraisal comes in under $X the buyer will bring in the funds for the difference between the appraised value and the contract purchase price. Not all buyers have the ability to do this. So it really affects sales - the sale is likely to go to a buyer that has the extra down payment funds in neighborhoods where values are rising rapidly.

I have noticed that these lowball appraisals are more likely to happen when the LTV is high.  The lenders deny the correlation, but it is especially apparent with any of the government loans (VA, FHA and USDA).  As I said, it has become so common that as agents we address the issue up front with the initial offer.

I am not in any way defending the particular appraiser - because they all have individual skills (or lack of skills).  I am saying that the whole valuation portion of the industry is under fire right now where the banks/lenders would rather not even use appraisers - they would rather go to AVMs (automated valuation models) which would cut out the appraiser altogether.

As to complaining - I suppose you could complain to the AMC - but I don't see it going anywhere. Maybe someone else has a better alternative.

[wendlan]

Thank you starting over, that was a good explanation. We are infact FHA loan and the offer was $1000 less than the appraised value done by the seller. So I guess it is a flawed system not necessariy the full fault of the appraiser? I don't know what to think. There is 2 weeks till the closing and things are still up in the air. Don't have a addendum to the current contract and contract is not terminated. The LO going back and forth with realtor trying to come up with how much we can pay toward closing with the money I have after my downpayment is paid. The LO did not get back to the realtor on Friday like promised so we sit here another weekend waiting as usual. Can't spend money, can't look at other houses and it just sucks!!!!

[StartingOver10]

Usually your Realtor would get in touch with the Listing Agent and negotiate a reduction in sales price to meet the appraised value when you have an FHA appraisal come in low.

I say this because there are only really 4 options with a low FHA appraisal: 

• the seller drops the sales price to the appraised value
• the buyer brings in cash over the appraised value to make up the difference to the contract price
• or there is some negotiation where the price is reduced somewhat and the buyer brings in extra cash
• cancel the contract.

As agents we can usually anticipate an appraisal issue - but not always. The difficulty with an FHA appraisal is that it stays with the property for 6 months so your seller can not accept another FHA financed offer if you walk away - unless the buyer has the extra cash. They will have to disclose the new lower FHA appraised value.

The LO typically stays out of these type of negotiations IME because it really is a buyer and seller decision.

[wendlan]

The trouble is our offer was 134 and seller pays 6% of closing costs. So they lowered the price to 123 but do not want to pay the closing costs. I don't have all the money to pay the closing costs. They are trying to negotiate the seller paying part and myself paying part up to how much we have saved. The issue is the exact downpayment closing costs we have to pay are not calculated correctly yet. They are estimated too high. I have $6500 and have given 1000 previously as a downpayment. FHA loan and PA has some extra charges for closing. So the new contract addendum can't be done until we know exact costs. How long does an underwriting review take?