home appraisal seems off

please dont quote.

we got our appraisal back and it came back above sale price so we are OK but we expected it to come back a lot higher than it did. we are really confused by the comps.

our house is 3300 sf colonial with a full basement and 2 car garage. one comp is a recent sale of a similar house nearby (3200 sf colonial with a full basement and 2 car garage). the other two are totally different. one is an 1800 sf splanch with a 1 car garage that happens to be a horrifically ugly corner house. the other is a 1900 sf hi-ranch with no basement. i have no idea why they used those houses, especially because the splanch was a mid 2011 sale and the hi-ranch isn't that close to our house. there are other recent sales in the area that are more similar to the house we are buying.

will the appraisal matter for anything other than qualifying for the mortgage? can someone explain why they would pick these houses as comps?

Message edited 4/12/2012 8:24:21 PM.

Re: home appraisal seems off

I'm not an expert at all, but I think they want it to come in close to the sale price. It looks kind of odd if the house is worth a tremendous amount more than you're paying. Our house is 4 bedrooms and we had comps with 1 or 2 bedrooms listed. We did a short sale, so they needed to get the value down near what we paid. Keep in mind, they make adjustments for the difference between your house and the comp anyway. Hope this makes sense and isn't totally wrong!

Re: home appraisal seems off

Thank you MrsT809. It did come in close to the sale price. Why do they want it to come in close to the sale price? This process is so confusing.

Re: home appraisal seems off

Some appraisers aren't local and aren't as familiar with homes in the area. Sometimes they make odd choices when selecting comps (which is why I always meet the appraiser and provide my own comps for any sale I am involved with).

I am not sure why an appraiser would use a different style house as a comp (e.g., compare a hi ranch to a colonial) -- the only reason I could think of is if there were no other recent sales of other colonials in your area.

But as a practical matter - the appraisal is just used by the bank to make sure the value is there and they will give the loan. The only reason to challenge it or to have another appraisal would be if the value didn't come in at the sale price.

It isn't public info, it has nothing to do with what your home would be worth if you decided to sell in the future, etc. If you wanted to re-fi down the road, you would have another appraisal done.

So while it doesn't sound like it makes sense - I don't see any detriment to you. I'd just let it go.

Hope you get to close soon and enjoy your new home!