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Not the first time a situation like yours has come up, and unfortunately it won’t be the last. Appraisers can only use comparable sales that are available(nearby, sold recently, and similar homes), and sometimes have to go outside the recognized market area for a home to find comparable sales. They usually include an explanation for any variation from standard underwriting procedures such as going too far for comps, using older comps, or homes with significant size or other adjustments.
Once appraisal has been submitted, it’s the underwriter’s call to accept it, reject it, or ask for more or different comparables. Occasionally a field review appraisal is ordered, basically a second appraisal to confirm the findings on the first. You don’t allude to this happening in your case, somewhat surprised if appraisal was rejected without either a desk review (in house appraiser reviews original appraisal), or field review.
Bottom line, the previous appraisal used comparable sales that are now completely irrelevent, and the fact that your house is “supersized” will make any appraisal problematic. I don’t see any recourse, unfortunately underwriter’s job is to protect the lender against undue risk and verify that loan and appraisal meet all Fannie/Freddie/HUD requirements. If an appraisal does not do so, and additional comparables cannot be located to satisfy underwriter’s judgement, loan will be denied.
I have financed my home twice in the last two and a half years, with a refinance as recently as a year ago. The loans have been superconforming with 20%+ equity. I went to the same lender to refinance again and submitted all of my paperwork timely. I paid $400 and the lender selected an appraiser to come to my house for the appraisal. The appraisal came in as my home having 20%+ equity versus the loan amount. I was told the loan would likely fund within the lock period but then it needed to be extended because of delays on their end. I thought we would close this week, but today I was contacted by the lender and told that my loan was disapproved because the comps used in the appraisal were too far away. Apparently the comps on properties with houses the size of mine weren’t in the immediate vicinity so the appraiser had to go 7 miles out for direct comps. They also did comps off of a house that sold on my street within the last couple months, but even though that house was built by the same builder at the same time, it is 40% smaller (basically my house is supersized). My question is do I have any recourse? I feel like the house appraised and if they wanted closer comps they should go back to the appraiser. Moreover, the appraiser put together a “cost to build” approach and under that number the house also came in as 20%+ equity. My lender just said that the house wouldn’t pass underwriting and that they wouldn’t even refund the $400. Any thoughts?
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