It doesn't matter that there are no comps in your county. The appraiser starts the search in your area and works out from there in a big circle until he or she finds usable comps. Due to differences in location, the appraiser then makes adjustments to the comps with an explanation for the adjustment. This is standard across the nation under USPAP (Uniform Standard Property Appraisal Procedure). Not only should your appraiser know this but your bank should know this also. Under USPAP, he or she may also use comps older than one year old but make the necessary adjustments to those comps as well, for example, if your area has shown a consistent appreciation rate of 2% a year, it will be adjusted and explained in the appraisal. No reason it should be rejected by the bank.

Thank you so much for the reply. That is a relief to know. He said they had to go about 100 miles out to get these comps, but that that they were over a year old. I don't know why he said there was a possibility they could be rejected....anyways my fingers are crossed for a good response!

Just wondering why the mortgage place called and told you that it might be rejected. Are they underwriters for a larger national bank? Also, if for some reason it does not work, the appraiser can use a method other than the sales comparison approach but I forget what it is called but just ask them about it, they should know what it is.

I might ask for a more experienced appraiser within the firm to consult.

Fwiw, All our comps were at least one year stale. And we had three appraisals, which is a whole 'nother story!

It is a local branch of a national mortgage company that we are using. So based on y'all's responses there should be no reason for them to reject the comps because they are over a year old.

The bigger issue is that it is not seeming that they are using an "arm's length" appraisal. Instead, it appears that they are proposing shopping it around to get the results that they want to have. That may have flown during the boom, but it's not legal in this day of tightened loan parameters. If they get audited, you may find yourself with a lot more issues than a low appraisal if you collaborate with them for that.

Comps need to be recently sold as far as I understand. They need to cast a wider net until they get some recent sales and then adjust based on the stats of the sale. My brother is an appraiser and its not common here because it is pop. dense and sales are abundant but that would be protocol.

If I recall correctly, our appraisal included sales that were more than a year old. During the recession, there were so few sales, that "recent" was simply too much to ask for.

So I messaged the mortgage company back today to get an update on the progress of the appraisal. He said: sorry, but the appraiser that was working for us declined to complete the appraisal. He said that they are now working with another appraiser and have found some better comparables to work with. Is this normal?? So we now have to pay this appraiser who refused to finish it. Should we let him go ahead with this other appraiser or should we be looking at other mortgage companies?

You cannot pick and choose your appraiser. You must accept the one that the bank chooses, and the must have a random way of choosing which one they use. That is in response to the inflated values given to so many homes during the boom and which created the massive underwater mortgage mess we all ended up with.

Declining to complete the job is unusual. It implies that the home was difficult to value, and that perhaps nothing really close in comps could be found.

Is the home larger and with higher quality finishes than those that surround it? That could definitely be a sign of trouble in hitting the number that the home costs as an appraised number. Real estate is all about location first, after all. Most homes in that situation appraise for less than they cost to build and the owner has to bring cash to the table. Just be prepared for that.

Jdez that's what we said about paying him. He never even came down to our property, just searched for some comps online. They are trying to tell us we may have to pay his some, but not the full amount. My husband told them that we aren't paying them a penny. We are getting fed up with this mortgage company and have already got another company we are looking into but I hate to start all over again with someone verifying our income, credit scores, etc. I am tempted to just go ahead and close the loan out and leave it where it's at. The bank we have the construction loan at will let us lock it in there for 15 years, but the payment is just like it were a 30 year. So that's why we were trying to sell it to a mortgage company because they can lock it in for 30 years. Our loan amount is 585,500. Should I keep waiting on this mortgage company or just leave the loan where it's at?

If at all possible, try to use a local bank. They, and the appraisers that they use, will be familiar with any unusual situations in your area. Their rates might be just a tad bit higher but not enough to really worry about it. If its like our hometown though, you'll have to have near perfect credit. Otherwise, I just don't know.

Second the local bank. We couldn't get the appraisal to work, even though we owned the lot outright and were putting a kings ransom down (like 40 percent). Our local bank was able to finagle it.

We just got our appraisal back this week and it came in $40,000 too low because they couldn't find any similar comps and had to use houses that we're not even new construction. So frustrating!

Would it be worth switching lenders and trying to get a new appraisal when comps are extremely limited?

Why is the home being appraised again at the end of construction? I thought construction loan requires closing at the beginning of construction at which time the home is appraised per construction documents and comps at that time.

Ours was/is only appraised at the beginning Hawkeye. We did a one time close construction loan though. If you did just the construction and have to convert, then you would need an appraisal after construction. Luckily, only 1 time close was available around here so even though my interest is a tad higher than a 2 part, I am safe from this particular issue. OP, is your construction loan independent(2 part)? or was it part of a 1 step loan?

We did not do a construction loan, but instead are doing builder financing and then we purchase the home from the builder after completion. So there never was an appraisal at the beginning.

Ah ha, got it. Our builder is too small to offer that. Hmmm. Definitely try a smaller local bank then. Do you have family who would do a personal loan to bring up your down payment? It doesn't all need to be in a single loan as long as you remember to pay both.

How did you arrive at your proposed value in the beginning? Does your contract have any language regarding what happens in these cases?

The value was proposed at the beginning based on sq ft and materials used. We got 3 different bids and actually ended up going with the lowest, so I can't even imagine where we'd be if we'd have gone with the others.

We may try a smaller local bank and hopefully the outcome is different.

We got our construction loan at a local bank. If we leave the end loan with them, it doesn't need another appraisal but they can only keep the loan in house there for 5 years. Our loan is a jumbo loan. That is why we are trying to find a mortgage co to go with that will lock it in for 30 years and therefore it requires another appraisal. If it comes in under appraised I was told that I could leave the difference at the local bank. But I can't even get an appraisal out of these people!

Oh my. Holcombe3, good luck with that. It sounds like you have some time but they must be able to produce an appraisal somewhere. Do you live way out of town?

First, I'm surprised the appraiser communicated with you directly. That wasn't allowed for us and we were very concerned. BUT he/she could communicate with our builder so he made sure they knew relevant details.

We had a problem with the first lender we tried using. Their plan was to sell the loan so there could only be a certain variance in the adjustments made against the comps. It was a learning process for us. We knew there would be big adjustments because the available comps were sketchy in relevance. We learned the hard way - after paying for that failed appraisal. It helped us though when we went to a local bank that said they wouldn't sell the loan. We had that really good appraisal with the big adjustments to the comps that our builder (not us remember, we were forbidden to directly communicate) could discuss with the new appraiser. Miraculously, the new appraisal had much more relevant comps and we ended up with an even more favorable appraisal.

The appraisal process is frustrating, a potential dead end and mostly out of your control.

Yes! The fact that the bank is not selling the loan is the key. If they are selling it, it has to meet certain parameters to be marketable. However, if you are an excellent credit risk the bank may opt to hold your loan - which allows some flexibility. Worth asking about. . . .