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I want to refinance my mortgage, but my appraisal seems low. What do I do?

The appraisal doesn't have to be the final word on your apartment's value.

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Question:

I'm trying to refinance my co-op mortgage and take out money for a renovation, but my apartment was appraised for about 20 percent less than I expected based on sales in my building within the last year. Can I challenge the appraisal? If so, what's the best way to go about it, and how likely am I to succeed?

Answer:

You can contest the appraiser's findings, but do it carefully, and above all, keep a cool head, our experts advise.

Banks tend to default to the opinion of the appraisal firms they hire, says Jonathan Miller, real estate appraiser and author of the Douglas Elliman market reports, so you'll need to be thoughtful and measured in how you express your concerns.

"Do not call the appraiser. They are not supposed to speak to you and can’t do anything for you," Miller says. "They are working for the bank, not you, even though you probably paid the appraisal fee."

Instead, approach your mortgage broker with a letter that outlines why you think the appraiser was mistaken in his or her assessment of your home's value, drawing upon sales on comparable apartments in your neighborhood, and providing information about your own building's financials.

"Data is what carries the day," Miller says. "Perhaps the appraiser missed a recent sale or didn’t get the condition of the 'comps' [comparable properties] right. Ask your real estate agent that sold you the house, or enlist one that you know to help and use public-facing sources for hard information."

Make sure your appeal letter is straightforward and to the point, ideally no longer than a page, and rest assured that many lenders are open to reconsidering.

"We typically will allow a customer to write a letter for dispute and supply reasons and what other sales they know of that may increase the value," says Brittney Baldwin, a home equity loan officer at National Cooperative Bank (a Brick sponsor). "This is then submitted to the appraisal department for review to see if it can be considered."

But there is a caveat to keep in mind: Even if your bank agrees to re-appraise your apartment, it doesn't mean that their final assessment of its value will be what you expected.

"Even if the bank empathizes with your view, they will send another appraiser out to perform another valuation, but they rarely discard the original appraiser’s opinion," Miller says. "Often in the best case, they might simply average both the results."

Ideally, you'll want to get your apartment appraisal-ready ahead of time by making minor repairs and touch-ups (a new coat of paint, say, or replacing those missing tiles), as small details like these can help in boosting how your home is valued.


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