Bad appraisal for VA loan - complaint filed/restitution

[CS1983]

When we were in Oklahoma, the VA appraiser did a bad job to put it simply. We filed a complaint w/ the Oklahoma Appraisers Board, as well as the VA. Yesterday, the appraiser called me and stated flat out he made a mistake and wants to make it right. I'm frankly unsure what "right" is at this point.

The house was erroneously listed at 1896sqft, and the appraiser reported that as the accurate GLA, and was purchased for $200,000; this subtends to 105.48sqft. We always knew it seemed smaller than that, but neither our realtor nor us knew how much smaller at the time, and with the detached shop, a lot of stuff was out there so it never felt like we were out of room. When we went to sell to move back, the realtor we used suggested we get a new appraiser out to measure. That measurement revealed a GLA of 1257, so we now have a phantom 639 sqft. Essentially, the 1896 was accounting for the attached garage as a factor into GLA, which is incorrect.

Meaning, based on the price per square foot, we should have purchased for ~$132,588.

Additionally, the appraisal report listed incorrect layouts, non-existent outbuildings, etc. We were not able to see the appraisal within our contestable window, as it was being held up by either the appraiser or the loan officer, so the incorrect diagrams and outbuildings was unknown to us until it was too late.

Translation? the appraiser approved/appraised incorrectly, and the VA should have never approved the loan.

So now we have a roughly $-67,411 difference in value, as far as I can tell.

The appraiser said he made a mistake about 17 times on the phone and kept reiterating wanting to make it right, but I dunno that he has crunched numbers.

I also don't know if the VA would be happy about me talking to him. I need to call the regional loan center and ask if I am able to even discuss things with him. There is no lawsuit, at least at this point.

Anyone ever seen something like this before?

Anyone have an idea about how the "restitution" would be handled?

[Irving]

I have no experience with this, but it's certainly an interesting situation. I'm interested to see if anything comes out of this.

[fitz19d]

Tough situation, and while a lot of blame is certainly on this guy. I'm not sure that there isn't at least some element of you bought it and happy at that price, cavaeat emptor kinda thing. Did you buy based on cost/sq ft? Because at least with folks shopping residential neighborhoods, you see everything going for X price roughly, I dont think there's much quibling over the price if it's reasonably the same in the area.

A rural property that deal with far more intangibles such as outbuildings etc, certainly could be harder to figure out reasonable cost since it's not just one in a strip of 40 houses.

Unfortunately no advice, if it was colorado could probably still sell for a little overpriced and be fine, but I bet the OK market isn't hot exactly.

[Martinjmpr]

I would assume the appraiser works on contract, either with you, your realtor or the VA, right? So....if there's a contract, I'd want to look at it and see what it says since it's likely to control what happens should one party or the other breach his obligations under the contract.

[Irving]

If the appraiser has E&O insurance, that could come into play I suppose.

[FoxtArt]

Interest in the outcome. I've got no guesses or estimations on to what extent the appraiser is actually liable or for what $. I can also imagine certain arguments that could theoretically be made to support mitigation (failure to mitigate) if it went legal, but every case is always going to have a unique, unpredictable outcome.

My only thought is to try to avoid a case if you can... lots of trouble and headache even if you have a winner. If they are willing to settle for less, I'd personally seriously consider it if I were in your shoes, but YMMV.

[Irving]

Is the house already sold? I assume that it isn't.

[Gman]

Somebody really screwed up by allowing the financing to proceed. Is there an appeals or arbitration process?

[oinco]

Very interested to see how this plays out, please keep us posted!

Seems like E&O should cover something here... what that is I am not sure. I could imagine the coverage would tend to try and at a maximum simply cover the incurred loan costs of the "overage"?

I would ask the appraiser (and show no intention as to what you want to proceed towards) what your full array of options are... you may find out interesting things that you would not find further up the food chain.

[FromMyColdDeadHand]

In the sales offer for the house what was the square footage listed at? What is the average and some standard deviations on cost per square foot in that neighborhood for similar builds?

Seems to me that you need to prove some kind of fraud to you, some misrepresentation. That you got a VA loan doesn’t seem to be consequential to me, it’s that you didn’t get what you were offered. If you can prove that you made that offer based upon that appraisers numbers you’d have a pretty good argument. But if you had already decided to buy it at that price before he did his appraisal, that would weaken your argument a bit.

Really interesting.