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Are there known fudge factors for appraisals, if they are to be used for a sale vs. for refinancing?
Part of me says that appraisals should come in at the same value regardless of purpose, but I have dealt with appraisers several times and one of their questions is what is the purpose of the appraisal... sale, refinance, HEloC, etc. It may just be to fill out that field in the appraisal report, but I suspect that they adjust based on this.
The question is, whether up or down, and by what percentage?
taking as a reference the refinance appraised value.
It would be useful to know, for example if one has refinanced but would like to figure what the appraised value would have been had it been for a sale, etc.
I believe there's also another fudge factor between Sale appraised value and contract value that banks are willing to accept for a mortgage.
I don't know, but when I refinanced I laughed at how high the appraisal was. Was really overvalued, when it was just for the sale (different place done within a week of each other) the new place came up to exactly what it sold for.
We have to fill in the purpose of the appraisal on the form. I am in California. I assume that it is the same in New York. One can appraise high by selecting higher comps. One can appraise low by looking for lower comps. One can "fudge" on adjustments. Appriasal is not a science. It is more or less an appraiser's educated guess. If you have 5 appraisers appraising the same property, you may have 5 different values.
In my building, refinance appraisals have been extremely low and well below what I would estimate the apartments would sell for on the free market.
It seems to me that the appraisers use the lowest comp and often make questionable adjustments to any higher priced comp. E.g., I was "deducted" $50k for being across the street from a school, even though I face the rear with open Empire State building views. The comp that was supposedly $50k better in this area has every window, including the bedroom, facing a busy cross-town street where buses run all day and all night long, with no views. I was also deducted $100k for being in an "average" postmodern walk-up (that has been published in four design magazines and is in the AIA's Guide to New York), versus a supposedly better but undistinguished prewar building. Oddly, neither of these things came up in the appraisal when we bought the place. Seemed to me that the high and low comps were $300k apart, and the appraiser just started deducting random things to make our place's appraised value be that of the lowest comp.
In the end, it did not matter to me as our LTV is < 50%, but it did affect one of my neighbors who had to bring cash to the table to refinance.
This is a good read from the NYT about appraisals and how they can be so different depending on purpose and even on who is doing it.
Long time no hear