Fighting Back Against Lowball Appraisals

The Wall Street Journal, Saturday/Sunday, June 2-3, 2012

WEEKEND INVESTOR:  THE NEW BASICS

“Fighting Back Against Lowball Appraisals,”  By Ruth Simon

“Record-low interest rates are a boon for home buyers and for homeowners seeking to refinance.  But low appraisals are making it difficult or even impossible for some borrowers to take advantage…

After almost six years of falling home prices, such experiences have become common.  About one-third of real-estate agents reported that low appraisals had resulted in the cancellation, delay or renegotiation of a purchase, according to an April survey by the National Association of Realtors.”

Many sales run into appraisal problems.  To help obtain accurate appraisals, the article speaks to the following:

1) Look at comparable sales from the last three to six months before seeking a mortgage.  2) Borrowers can accompany the appraiser pointing out improvements and comparable sales. 3) Start over, if necessary, by resubmitting the application to a different lender. 3) Have examples of recent comparable sales that weren’t considered by the appraiser.  4) If unhappy with an appaisal, ask to have it reviewed.  5) Start over, but it may cost you if the bank won’t pay for the new appraisal, and you must have a good reason for a reappraisal.  

The metaphor, the low ball in low ball appraisals, is a gambling term from poker.  From Wikipedia:

Some forms of poker, often called lowball, sometimes called low poker, reward poor poker hands (in the traditional sense). There are four common variations on this idea, differing in whether aces are treated as high cards or low cards, and whether or not straights and flushes are used. The methods are:

  • Ace-to-five low: The lowest possible hand is 5-4-3-2-A, called a wheel. Aces are low and straights and flushes are ignored. This is the most common method.
  • Ace-to-six low: Also called 6-4 low, since the lowest possible hand is 6-4-3-2-A. Aces are low and straights and flushes count as high hands.
  • Deuce-to-seven low: Also called 7-5 low, since the lowest possible hand is 7-5-4-3-2. Almost the direct inverse of traditional “high hand” poker. Aces are high and straights and flushes count as high hands. Since aces are high, A-5-4-3-2 is not a straight, but just ace-high no pair.
  • Deuce-to-six low: The other, mostly unused, possibility would be 6-5 low. Aces are high, straights and flushes are ignored.
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