How accurate are HELOC 'bank appraisals'?

17 years ago

Hi again. I just applied for the home equity line (to use for a new home) and am preapproved for more then I was hoping for. The loan officer input my home address into his computer and came up with a much higher value for my home then I would have thought, $319k, I estimated it would come out to be $270k. I know that there is no way I would be able to get that much for my home, but would it be safe to assume that I could then get $260k when I sold my home? I know it's very hard to tell without seeing a home but I was wondering if the bank's appraisals can be somewhat of a gauge of home prices. I was only going to use what I know for sure I could get back when we sell this home. If anyone could give me some more advice I would greatly appreciate it. Thanks!

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Comments (8)

jasper_60103
17 years ago
yeah, bank appraisals for HELOCs are pretty loose. Since its a line of credit, you can use at your own discretion or ask for a lower line.
quiltglo
17 years ago
Ours did a drive-by and came in $60,000 less than the selling appraisal. Trust your own judgement.
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Things really are crazy now for sure- I am the one who posted before out my HELOC getting frozen right in the middle of my major house renovation. I decided to contact another bank for a new HELOC, and at the same time went down the path with my existing bank providing a new appraisel. Before we did our renovation, we had two realtors come to our home to advise us on what houses were selling for in like size, condition to ours, and what they thought the renovation might add. They both replied with a number that was very close to each other, assuming that things do not change too much (we live in a very desirable part of town, that did not get the huge run up on prices and no big drops lately). Then, the appraisor gave us another number, about 20% lower than the realtors but high enough to continue our HELOC if our original bank actually wants to do so. Then, the new bank denied us a HELOC, stating that their compturized valuation came in too low- It was so low it was laughable- it was almost half lower than our actual appraisel. Now, I understand being conservative, but that is ridiculous. I almost wonder it they had the wrong house. As by chance, on the same day the county sent us our new assessment, which went up by 10% of course. At this point, our contractor has to be paid and the original bank is taking forever to review our new appraisel and I am about done with the whole thing. We are very fortunate in that I am going to be able to sell enough stock to cover what we owe, but it was not what I planned when I started this whole thing, and I hate putting so much more cash into the house. Even with the HELOC, we would have been at 80% LTV, and now we will be more like 60%. We don't plan to sell for at least 10 years, so at least I can enjoy my investment :)
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Are the electronics built-ins for a media room? If so, it's not unreasonable that they would ask for inclusion. If your TV is just parked on a TV stand...then their request is ridiculous, IMO. Sounds like they're using the chandalier as a bargaining "tool"? There's nothing wrong with that. In fact, our last buyers did exactly that to us! What they didn't know was that the wonderful antique fixture was something I'd picked-up at auction for $40 plus the auctioneer's fee! (He who laughs last....?) Linda's given a very good commentary on the appraisal issue. Remember, comps are just a "tool" to sorta compare one thing to another. It's NOT an absolute statement of value. Only the market place will give you an absolute value. You've said your property is difficult to appraise. So, a discrepency should not automatically be disregarded. Since this still mysterious appraisal seems to be the major sticking point at this time in the negotiations...I'd request a copy before countering. If they won't provide it...then, you'll need to decide if it's "possible" you've overestimated true market value? Since I don't know the market range you're in, I don't know what kind of a percentage $35K represents. Is it 10% off your thinking or is is 40% off? If this is a $500K home...then the $35K represents a 93% offer...not too bad, huh? Certainly, a good place to negotiate from. I apologize if I didn't see somewhere in this thread what the actual listing price is? Tricia
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... DESERVE to be low-balled! By both you and the appraiser! What kind of hoser allows his family to live in a house with obvious (and CHEAPLY corrected) WIRING faults? And the FURNACE thing, WTF? I know of AHJs in the northeast that will DENY YOU A C.O. for such lack of major infrastructure! Throw in the shabby roof and it would require ALL my self-control to not be openly snide with such sellers! You "done good" to just remain civil. Perhaps these sellers hit the HELOC "ATM", but spent it on everything BUT the house?... like maybe... recreational chemicals? =:O Very odd situation... as noted above, you might be picking up this same house in a foreclosure auction, not too far in the future. Feel for ya inexplic... buying a home for your family to live in naturally gets more emotional than looking for an income property you'll never spend a single night in. Next time be working a few in parallel. Nothing wrong with that in a buyer's market. PS: Don't do the long letter thing anymore... casting pearls to swine. But DO tell us more about the seller's appearance, behaviors, nervous tics, etc. ;')
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Comments (1)
What value the bank gives a home vs what a realtor appraises will be two different numbers. Putting $40K into your home doesn't mean it will increase in that value. Generally, you get a return on your investment from upgrading kitchens, baths and flooring. If you're thinking of resale value, I would bring in a couple of realtors and see what value they'd place on your home after explaining the upgrades you intend to do. In my area, as in most, location also will play a role in the value of your home. Here is a link that might be useful: remodel/resale
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User
17 years ago
The higher the Heloc appraisal, the higher the line of credit, the more you borrow, the more interest they earn! I'd somewhat take the appraisal with a grain of salt.
gardensgirl
17 years ago
I just did a refi and they told me they use some new computer model.........the "appraisal" came in high definitely, but if I used that "appraisal" price when listing my home, no one would come to it at all. It's just too high for what my market is currently bearing. I really think they just wanted me to take a large HELOC, which I refused to do at the time.
cindyb_va
17 years ago
Stacyrp, many loan officers at lending institutions get bonuses or other cash incentive for the dollars of production they book each month. You cannot depend on what this guy came up with as anywhere near what your house is actually worth.

It is possible that the $319k is an accurate reflection of your home's worth, but it is just as possible he inflated it to get bonus on the extra $50k (or whatever) of line he will get when you book your account.

The only way to ascertain what your house is worth is to look at comps, or get a reputable appraiser to come and value your property.
triciae
17 years ago
The industry standard is that residential loan officers are salary paid. Commercial and large construction loan officers usually do get commissions based on production.

If a loan officer has "inflated" an appraisal that is grounds for immediate dismissal for cause. Remember that the real estate is collateral for the loan. It is not in the lender's best interest to inflate value.

Residential appraisals are often done by computer models today. But, they are up-to-date with current local comps and amazingly accurate. If somebody has a HELCO appraisal from six months ago and their property is not worth what the appraisal says...well, maybe the market's declined in those past six months?

Anyway, the lender's appraisals are "reputable". If someone defaults on their loan & the lender has inflated the value during the appraisal process and, thereby, given a larger loan to value than they should have...it's to the lender's loss. What's the incentive for a lender to do that?

Tricia
Who speaks from 15 years lending experience & a hubby who currently manages a $2.5B+ residential real estate portfolio.
brickeyee
17 years ago
They are accurate enough to get you the HELOC.
Does anything else matter?
theroselvr
17 years ago
Bumping to move troll spam down / off the page

How accurate are HELOC 'bank appraisals'?

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jasper_60103

quiltglo

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