Watched a refinance shrink because the third bedroom got written up as a den
A woman from my book club refinances houses for a living, and when I asked how the appraisal part actually works she told me to come watch one instead of reading about it. So I sat on a folding chair in the front room of a finished three bedroom with new floors and the paint smell still in it.
The appraiser was polite and quick. He measured, took photos, asked when the roof was done. Then in the back bedroom he stopped at the window, put his tape across the opening, and wrote something down without saying a word about it.
Two weeks later she called me. He had written the house up as a two bedroom with a den. The window in that back room was original and too small to count as egress, and she had never touched it because that room was already framed and painted when she bought the place. Every comp she had picked was a three bedroom. Value came back about 22k under what she had underwritten, so the cash-out left roughly 19k of her own money sitting in the house instead of almost none.
She wasn't even angry. She said the window is a 1,400 dollar problem she should have caught on the first walkthrough, and now it is also a several month problem, because the fix has to happen and then the appraisal has to happen again.
I have read the five steps of this thing maybe thirty times and not one version mentions a tape measure across a window opening.