[RANDY P]

One other thing too: the methodology that the original appraiser used may have been a bit lenient compared to what the lender wanted to see.

What probably happened is they took the original appraisal and compared it to the AVM - an electronic valuation model that lenders subscribe to; it takes the area and uses the address and what's on electronic file at the assessor's office (rooms, sq foot, lot size etc.) and gives the lender an approximate estimated value of the home.

Either the paper appraisal comes close or approximates that number, or it doesn't. It's all based on what the appraiser used for comparables VS. what the AVM is using for comparables. Apprisers like to get cute and use much more expensive houses than the subject and then adjust DOWNWARD to make comps.

Any excessive adjustments beyond a set percentage usually gets the appraisal flagged, also if there are comparables in the area that are a better match than the ones the appraiser chose will get you killed.

Imagine the process like this: say you were buying a condo, and they were middle of the road in value. You have neighbors that moved in last month, and their condo is identical to yours. There are also super high end condos across the street that cost 2x as much per square foot.

If you got an appraisal done, the appraiser has to use the condo of your neighbors that closed last month when they bought it, not the ones across the street as that is an exact match. If the appraiser tried using the one across the street and the lender saw it- good bye, it's over.

Appraisers can get their necks on the chopping block if the lender sues it's determined that the value of the property wasn't there because of improper methodology. They can also get themselves kicked out of the lender (blacklisted) for poor work, so there really isn't much of an incentive for them to stretch values.

Stretching values is one of the biggest excuses / reasons given for the current housing crisis, so they are gun-shy.

Comps have to be based on CLOSED sales, and I think within the last 6 months (could be a year, I don't know the current guidelines), and of course within a 1/2 mile or so of the subject.

If there are no comps that fit the subject then the appraiser has to go further away, then the lender hates that too, so good bye on that issue as well. But, the appraiser can try it, and it's legal but the lender doesn't have to accept it since that method isn't allowed for in the lending guidelines.

It sucks, but that's the way it works.