Appraisal lands 22k under ARV, what goes in the rebuttal?

Question

Take a duplex bought at 140,000 with 62,000 put into the rehab. Comps support 265,000. The appraisal comes back at 243,000. At 75 percent that is 182,000 versus a 198,000 underwritten refinance, leaving 16,000 stuck in the deal. With the appraiser's report in hand, two of the three comps are single family, and the one duplex comp sits six blocks out in a worse school zone. No adjustment was made for the subject being fully separately metered with two two-bedroom units, against a comp running one bedroom over one bedroom. The question worth asking before filing a reconsideration of value is whether an 8 percent gap justifies the effort, or whether the better move is to take the 182,000, keep moving, and pull the rest out later. Going back with stronger comps also puts the file at risk of a lower number, which is the real cost of a rebuttal and the reason most experienced operators only file one when the comp mismatch is this clean.

Rena Expert · Accepted Answer

A reconsideration of value is a formal request to the lender asking the appraiser to review specific comparable sales you supply. It rarely moves a number by 8% on its own. It moves numbers when you can show the appraiser used a comp that a competent reviewer would not have used, which is roughly what you're describing. Single-family comps for a two-unit income property is the strongest point you have, stronger than the metering or the bedroom count, because it goes to whether the right approach was used at all rather than to the size of an adjustment.

A rebuttal doesn't usually put the file at risk of a lower value. Appraisers almost never revise downward on a borrower-initiated review, since doing so implies their original work was wrong in the other direction too. What it does risk is time. Two to three weeks is common for a review to come back, and if your rate lock runs shorter than that you're paying an extension fee, so get the lock expiry in writing before you file anything.

The piece that matters more than the 16k is what the 182k does to your coverage. A smaller loan means lower debt service, and if you were sizing to a 1.20 DSCR at 198k you now have room you didn't plan for. Some operators find the lower number is the one the property can actually carry.

One structural thing: ask your lender whether they'll allow a second full appraisal from a different appraiser rather than a review of the first. Some will, some won't, and the answer is lender policy rather than regulation. Get it in writing either way.

priya_n21 · Answer

An appraiser is not required to use the closest comps, only the most similar ones within the guidelines followed, so distance is one factor among condition, bed count, and metering setup. Adjustment gaps like a missing credit for separate metering or a bed count mismatch are what gets a second look, so the frustration points at a real weakness in the report, not an unlucky draw of comps.

nicole_adeyemi · Answer

Marlow, often there aren't. Two-unit sales are thin in a lot of submarkets, six blocks might genuinely be the nearest arms-length duplex sale in the window. And in about a dozen states sale prices aren't public record at all, so an appraiser is working from MLS data and whatever the local board shares. That constrains the pool more than people realize. Cairn, filing is the right move. The single-family comp point is clean enough that it costs nothing but the lock question.

mitchell_ray4 · Answer

Separate metering is worth real money to an operator and almost nothing to an appraiser unless there's a paired sale showing it. That's the frustrating part of the whole exercise. You spend 4k on the meters and the report doesn't know what to do with it.

Appraisal lands 22k under ARV, what goes in the rebuttal?

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