House Appraisal Drops Right before Refinancing

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills

House Appraisal Drops Right before Refinancing

Postby Trikkur » Fri Mar 22, 2013 12:46 pm

Hi everyone. I posted a few months ago asking for some advice for my fiance and myself. The consensus was that we should pay down our mortgage and refinance so there was no more $75/month PMI payments. The original loan was for $175,000 @5.5% (ouch) in 2009 and the house was appraised for $169,000. I have $146,000 remaining on the loan and was trying to get to the $135,000 mark so I could refinance.

However, I just looked last night on the Auditor's website and it appears that our house was appraised last year for only $143,000. Can someone tell me if I'm going to be able to refinance now? It appears as though all the money I've spent on the mortgage + extra payments these last 3.5 years has gone to waste? There is absolutely no way I can afford to pay it down to 80% of the new appraisal amount. Should I attempt to get a new appraisal or just stick it out paying PMI until I can somehow pay this new $25,000+ off.
Trikkur
 
Posts: 9
Joined: 20 Nov 2012

Re: House Appraisal Drops Right before Refinancing

Postby prudent » Fri Mar 22, 2013 12:52 pm

Who is the "Auditor"? Your local taxing authority? If so I would not assume their number reflects an actual appraisal of your home's value.
User avatar
prudent
 
Posts: 1000
Joined: 20 May 2011

Re: House Appraisal Drops Right before Refinancing

Postby runner9 » Fri Mar 22, 2013 12:54 pm

Refi value amount is usually calculated by an appraisal, not the county auditor.
User avatar
runner9
 
Posts: 939
Joined: 2 Aug 2011

Re: House Appraisal Drops Right before Refinancing

Postby ryuns » Fri Mar 22, 2013 12:58 pm

You might just move forward with pursuing a refi and see if anyone's interested. While they know that you have to pay for the appraisal, they don't want to waste their time if there isn't reason to believe you'd at least come close. As a random data point, our appraiser during our refi was anything but professional about this point and literally asked us what we needed the value to come back and said "yeah, I think I can make that happen".

Not that I'd put any stock into it but just out curiosity, have you checked your Zillow zestimate for your home? How did that compare?
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
User avatar
ryuns
 
Posts: 3293
Joined: 7 Aug 2007
Location: Sacramento, CA. Age: 29

Re: House Appraisal Drops Right before Refinancing

Postby MathWizard » Fri Mar 22, 2013 12:59 pm

You are confusing the Auditor's assessment with an appraisal.

Higher assessments cost you money because your taxes are based upon the assessment.

If you had a very low LTV rate, and were pursuing a no-cost short term Home Equity loan, some lenders
would go by the assessment (Mine did because I was at about 30% LTV, i.e. 70% paid off).
but that is not the case here.

Normally, a lender will require a true appraisal which will cost a few hundered dollars.

You try Zillow.com for an estimate of what an appraisal might be to see if it is worth it
paying for an appraisal. Unfortunately, Zillow is often not very accurate, but you can see
some of the houses that have been sold near you which are similar to your house.

Housing is coming back, I'd be surprised if your house value dropped from 2009 (2007 or 2008
would be a much different story.)
MathWizard
 
Posts: 1178
Joined: 26 Jul 2011

Re: House Appraisal Drops Right before Refinancing

Postby obgraham » Fri Mar 22, 2013 1:01 pm

Well yes, if the value of your house has declined (like most), what you've paid out has not increased your equity.

Your refinance will be based on the current appraisal, not by what you paid for it, or what it was in 2009.

This is the nature of the real estate problem we've all been experiencing the past few years!
obgraham
 
Posts: 321
Joined: 28 Jan 2013

Re: House Appraisal Drops Right before Refinancing

Postby Trikkur » Fri Mar 22, 2013 1:17 pm

Who is the "Auditor"? Your local taxing authority? If so I would not assume their number reflects an actual appraisal of your home's value.


Yes, I was using the County Auditor's value.

I used Zillow and they gave a value similar to when we bought it for $168,500, which is much better for me. I'm still a bit away from paying down that 80%, but it is much more manageable and hopefully I can go through with it this Summer.
Trikkur
 
Posts: 9
Joined: 20 Nov 2012

Re: House Appraisal Drops Right before Refinancing

Postby Rodc » Fri Mar 22, 2013 4:33 pm

May vary some state to state, but here the assessment process goes something like this:

Auditor (Town Assessor for us) collects home sales data for a year. Then spends a year building and tuning the assessment model, and then getting it certified by the state. Then you get a new assessment, which is about 2 years out of date. When prices are going up you feel good, because it is a low number and you think you are getting a deal on your property taxes. In a declining market the number is high and you feel screwed. :)

On average since these biases are shared by everyone it really does not matter.

But assessments even if done pretty well are never really for your property. Only rarely does a house get visited and the actual value of sprucing up, landscaping, or negative value of not keeping things up come into play.

So unless values are pretty flat, and you live in a very average house, will assessments match up closely with an appraisal.

What matters in most cases is a true assessment. Of course those can be less than perfect as well. No one knows the value of their house until they make an honest attempt to sell.

Best of luck.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
Rodc
 
Posts: 9449
Joined: 26 Jun 2007

Re: House Appraisal Drops Right before Refinancing

Postby Greg17 » Sat Mar 23, 2013 7:16 am

Rodc wrote:
But assessments even if done pretty well are never really for your property. Only rarely does a house get visited and the actual value of sprucing up, landscaping, or negative value of not keeping things up come into play.




It definately must vary state to state. I got a call from the town asking to come in the home and assess the value. I asked what for, and their response was that certain items would increase the value(what I'd be paying in taxes). Some of their examples were insane, such as stainless steel appliances, which are not part of the house. I find in ridicoulous that they want us to pay more in property tax on an item that is not permanently attached to the house. What's next, paying more for having art on the wall?
Greg17
 
Posts: 42
Joined: 1 Feb 2013

Re: House Appraisal Drops Right before Refinancing

Postby obgraham » Sat Mar 23, 2013 11:29 am

I got a call from the town asking to come in the home and assess the value.
If I recall, you have the right to deny them coming inside to do assessment evaluations. Of course, then they'll be irritated, and do it by looking in the windows and likely jacking up the assessment.
obgraham
 
Posts: 321
Joined: 28 Jan 2013

3 simple rules

Postby davebarnes » Sat Mar 23, 2013 12:55 pm

1. Your assessed value has NOTHING to do with the appraised value, nor market value.
2. Zestimates are crap and have NOTHING to do with the appraised value, nor market value.
3. Appraisals are the only thing that have anything to do with appraised value (which is what the lender cares about).
A nerd living in Denver
User avatar
davebarnes
 
Posts: 252
Joined: 2 Jan 2008
Location: Berkeley, Denver, Colorado USA

Re: House Appraisal Drops Right before Refinancing

Postby pheleven » Sat Mar 23, 2013 1:16 pm

I find it interesting how many people hate zestimates. I've found my region (Northern CA) they're a bit low, but we're also seeing massive appreciation on 'lower end' houses in the 0-250k range -- 5-10% a month lately. The Zestimates are showing this kind of growth, but they're a month or two behind the list prices (which are generally being over-bid).

I've found them to be very helpful, if you assume they're just a general guess at an average house within that size and area with known upgrades. You can see when people are WAY out of whack on their listing price, unless they have a goldmine in the back yard or termites.
pheleven
 
Posts: 39
Joined: 20 Feb 2013

Re: House Appraisal Drops Right before Refinancing

Postby stan1 » Sat Mar 23, 2013 1:25 pm

My experience is that the people who hate Zillow also don't like hearing that their house is worth 20-30% less than they think it is. Sure there are exceptions where a house is worth 20-30+% more (or less) per square foot than nearby houses -- but there are still plenty of people in denial about the value of residential real estate. A house is only worth what someone is willing to pay for it.
stan1
 
Posts: 3154
Joined: 8 Oct 2007

Re: House Appraisal Drops Right before Refinancing

Postby runner9 » Sat Mar 23, 2013 4:26 pm

You've given us a link to your actual home address, with photos? Really?
User avatar
runner9
 
Posts: 939
Joined: 2 Aug 2011

Re: House Appraisal Drops Right before Refinancing

Postby sscritic » Sat Mar 23, 2013 4:48 pm

This is the best part!
Not one word on this website is legally binding.
sscritic
 
Posts: 19709
Joined: 6 Sep 2007

Re: House Appraisal Drops Right before Refinancing

Postby Mudpuppy » Sat Mar 23, 2013 6:19 pm

Zillow and Trulia are good for giving a list of recently sold properties in your area. You can import that data into a spreadsheet and use the information to build a more accurate picture of your home's current value, based on recent comps. It won't exactly match what an appraiser will come up with and it rarely matches the Zillow or Trulia estimates in my experience, but it will let you know if the appraiser was completely off the mark.

For example, my home is right about average for the neighborhood in terms of square footage, number of bedrooms, number of bathrooms, and features. It is a larger lot size than most (about 3000 sq ft more than the average), but it doesn't have a pool (only about half of the neighborhood does have pools), so those two pretty much cancel each other out. I've had it appraised twice, and each time the appraisal came it at about the area average. Zillow and Trulia on the other hand were a little on the low side each time, but by a small margin (2-5%).

So the closer to "average" your home is, the more useful the estimates from these websites will be. If your home is above or below average, or if your neighborhood is filled with unique homes, such that there really is no "neighborhood average", then the websites will be rather useless. Their algorithms are not designed for extremes.
Mudpuppy
 
Posts: 2395
Joined: 27 Aug 2011
Location: Sunny California

Nerds everywhere

Postby davebarnes » Sat Mar 23, 2013 10:04 pm

sscritic wrote:This is the best part!
Not one word on this website is legally binding.
OMG! A footnote clicker. LOL.
A nerd living in Denver
User avatar
davebarnes
 
Posts: 252
Joined: 2 Jan 2008
Location: Berkeley, Denver, Colorado USA

Re: No, Zillow sucks

Postby Mudpuppy » Sat Mar 23, 2013 10:20 pm

davebarnes wrote:
Mudpuppy wrote:Zillow and Trulia are good for giving a list of recently sold properties in your area.
No, they are not.
They both [stink --admin LadyGeek] when you have scrapers and the lot gets split.

Splitting lots is not the same as selling lots. All Zillow and Trulia report is the public record of a sale, which does not say anything about what the new purchaser intends to do with that property (or what the seller did with the property before selling it). If you're worried about lot splitting (which is rare around here, so not high on my list of concerns), then it's up to you to check the property records with your county's assessor (or recorder) for the addresses listed on Zillow and Trulia to see what the information (and history) of the property is. A real appraiser would have to do the same thing, and so do you if you want to make your own "appraisal" using the sales listed on Zillow and Trulia.
Mudpuppy
 
Posts: 2395
Joined: 27 Aug 2011
Location: Sunny California

Re: House Appraisal Drops Right before Refinancing

Postby LadyGeek » Sun Mar 24, 2013 8:34 am

I removed a few posts containing personally identifiable information, which is strongly not suggested for this forum. This site is heavily indexed by google. Information posted here (like your investments or true location) will be linked with information found elsewhere; such as social networking websites, commercial marketing companies, and employers. Some continuity is lost.

Those posts also contained inappropriate language, which is not acceptable in a family-friendly forum. See: Forum Policy
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones...

- avoid profanities, obscenities, lewd and otherwise offensive words and remarks
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
LadyGeek
Site Admin
 
Posts: 16108
Joined: 20 Dec 2008
Location: Philadelphia

Re: House Appraisal Drops Right before Refinancing

Postby rooms222 » Sun Mar 24, 2013 3:00 pm

In the Detroit Metro market, for condos, I am finding that the zestimates are high, but the lower end of the value range listed in small print, later in the listing, is very accurate for actual sale prices.
rooms222
 
Posts: 13
Joined: 22 Feb 2013


Return to Personal Finance (Not Investing)

Who is online

Users browsing this forum: Bengineer, cromwell, edge, gkaplan, Grateful1, IlliniDave, JDDS, robby152, seeingeyestrike, Sheepdog, sscritic and 61 guests