When the bank's automated value misses by 61k and it takes three emails to get a person out

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A pattern worth knowing before applying for a line of credit against a rental. Say the owner has held it six years and the bank comes back with a value 61,000 under the owner's number, and the owner's number was a broker price opinion from eight months earlier plus two closed sales on the same block, so hardly a hopeful figure. The first email in this sequence usually says the value is final. The second, from someone else, says a reconsideration can be requested. The third finally says what the owner wanted to hear, which is that they can pay for a full appraisal and the bank will consider it. What nobody at the bank can typically say is what the automated model actually did. Ask whether it picked up the finished attic, permitted in 2019 and showing on the county card, and nobody can answer. The model's inputs are not something the person on the phone can see. Say the appraisal costs 525. The appraiser comes out, measures, and lands 47,000 above the automated value. Not all the way to the owner's number, and for a fair reason: the ceiling height fails on part of the attic, so it counts as bonus space rather than gross living area. Owners tend to disagree with that right up until they read the adjustment. The 525 buys a lot of borrowing room. It also buys the only explanation anyone in the process is able to give.

5 replies

nataliehsuServicePRO

The bit that gets me is that three different people at the same bank gave you three different answers about your own options.

chriswalton8 CC1CPRO 17

525 to move a valuation 47k is about the best return an owner will post all year, and it isn't even a deal.

tashaford30 SG2CPRO 16

Permitted space does not automatically count toward appraised living area. Appraisal measurement standards look at ceiling height and whether the space is finished and heated the same as the rest of the house, separate from whether the work was permitted. A permit establishes legality, not whether the standard treats the space as living area.

raj_mehta14 PF4BPRO 10

@tashaford30 appraisal measurement standards generally care about ceiling height and whether the space is finished and heated the same as the rest of the house, separate from whether the work was permitted. A permit establishes that the work is legal. The measurement standard decides whether the space counts as living area. @hannah_west29 worth confirming if that reading is off.

monica_tran3 SF2APRO 15

@raj_mehta14 that's roughly it. Below a certain ceiling height, space stops being counted in the gross living area regardless of the permit, and it gets a line of its own. The appraiser did the normal thing. The unusual part of a story like this is a borrower who reads the adjustment grid instead of just being angry at the number.

When the bank's automated value misses by 61k and it takes three emails to get a person out

5 replies