Appraisal discrepancies

My wife and I are in the process of buying a "New" construction home from the builder, using a mortgage co.
My qustion is: The builder recommended an appraiser to the mortgage company to do the appraisal on the property for the underwriters. Well, we found out that the appraiser said that he could not finish his appraisal because the property could not appraise for what the selling price was.
He did physically go to the site and did everything that he was going to do. And he figured $70,000 to 75,000 for the appraisal. This is w/out appliances, fence and ceiling fans. Well, the mortgage company ordered another appraisal from the appraisal company that "they" normally use, and they appraised it for $82,000. But, the appraiser included appliances. Which, there are none. The square footage was 34 sqft. different and they used comparatable properties that were over two hundred sqft bigger and that were priced at over $100,000. dollars., and in much different site areas that appraise for much more money.

Can the mortgage company order a second appraisal or do we even have a choice of whether one is done or if they use/or negotiate with the first appraiser amount?

Do I need a lawyer?

[HomeGuru]

The mortgage co. can order a review of the first appraisal with an independant review appraiser.
Both appraisals could be correct if based on differing assumptions and comparables.

[Edited by HomeGuru on 04-20-2001 at 12:28 AM]

Your being somewhat avasive, in my opinion. Could you please answer, I guess in laymans terms. The fact that there is a difference in square footage, between the 1st and the 2nd appraisal, which is significant to me. The fact that there are no appliances and that they were marked that there were on the 2nd appraisal, does this constitute a need for an attorney?

[HomeGuru]

I am not being evasive. You just have a one track mind and have no knowledge and understanding of the methodology of real estate appraisal and assumptions.
The difference in 34 SF is negligible and so minor that I would not be concerned at all. It could be due to a field measurement error. This is how unimportant the 34 SF is. If two homes are exactly alike and one was 34 SF larger, I would value both the exact same amount in the market data and income approach. Only in the replacement cost approach would the larger home be slightly more in value but nothing of reat significance. This last value is determined by replacement cost per square foot.

Now for the appliance issue; it is perfectly legal and correct to value something that is not physically present as long as the appraiser arrives at value under the assumption that the component will be there. And that the appraisal is based on that assumption.
EX: I appraise a single family home with a 1200 SF addition and a new roof on the orignal home.
The existing home does not have a new roof and the addition is yet to be built. I can establish and certify value based on the addition and the new roof as completed provided the assumptions in the appraisal report state that. In other words, in layman's terms, "this appraisal is based on the construction and completion of the addition and the new roof".

In my initial post I stated that a review appraiser could be used. In the real estate appraisal industry, there are designated and certified appraisers who are caled review appraisers. Their job is to review appraisal reports completed by other appraisers.
If you felt that there was an error made by the lender's appraiser, you could request that the appraisal report be reviewed by an independent review appraiser.

Lastly, both appraisal reports could be correct as each one may have used different assumptions. If both used the exact same assumptions and comparables there should be somewhat similar appraised values for the subject property at least a value within plus or minus 3-5%.

So you see, there is no need for an attorney as you must investigate and understand the appraisal methods first, before jumping to conclusions prematurely.

Signed,
HomeGuru
Certified Real Estate Appraiser