Ronda Kaysen in Co-op/Condo Buyers on July 31, 2012
Once an appraisal is filed with the bank, getting it changed is no easy feat. A buyer has only three grounds for challenging it: He can point out factual errors; he can provide additional comparable data; or he can request that the appraiser explain his methodology, like how the floor plan was measured. But by and large, banks stand behind their appraisers.
"It's very difficult to get an appraisal changed. You really have to show some manifest error, like looking at the wrong address," says Reich, of the firm Wolf Haldenstein Adler Freeman & Herz.
Although co-op boards and sellers have little involvement in the appraisal process, there are steps they can take to improve the odds that appraisals will be accurate:
Remember the outliers. If a unit sold for an unusually low price, make a notation of that in the building's transactions records. If there were mitigating circumstances, like an estate sale or a divorce, include that information. Be sure the property manager has the details readily available should the appraiser call. "You want to know what the story of that sale is, and you want to make sure the managing agent can communicate that to the appraiser," says Michael Vargas, owner of Vanderbilt Appraisal Company.
Package it. Assemble a standard appraisal packet for the building. Include information about comparable sales. Also include information about the building, such as amenities, qualities of the finishes, and tax abatements. "We definitely found that the appraisals came in more accurately when they used our information," says Stephen G. Kliegerman, president of Halstead Property Development Marketing.
Know more. Request a copy of the appraisal report in the purchase application. The sale price may not reflect the appraisal, especially in the case of a cash deal. But if appraisals are low, it's good information for a board to have on hand. And if there are any inaccuracies in the appraisal, the board can catch them. "The co-op itself may not have any clue that there was some back and forth or some renegotiation," says attorney Theresa Racht, a partner at Racht & Taffae.
Spruce up the place. In the case of a sale, an apartment has likely been staged already. But when a property owner refinances his apartment, he often hasn't done anything to give it a good first impression. Although a fresh coat of paint won't affect an appraisal, cleaning up clutter and organizing the closets will help an appraiser see a property more clearly. If a resident has plans to replace any appliances, doing so before the refinance might be worth the effort. Says Vargas: "It's always best to put your best foot forward."
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?