ALAMO (CBS 5) – Jun Yang doesn’t take disappointment sitting down. An appraiser hired by Bank of America pegged the value of Yang’s home in Alamo at $200,000 less than he expected.

Yang then did his own appraisal. The orthopedic surgeon compared the prices of similar homes sold in his area to the value the B of A appraiser assigned to his home.

“It’s newer, it’s bigger, it’s got half a bathroom more and yet it’s 30 percent less,” Yang said.

It’s not just a matter of pride. Yang is trying to refinance his mortgage, and based on its appraiser’s findings, Bank of America said no.

“An appraisal is just an opinion,” said Tara-Nicholle Nelson, consumer educator at Nelson said lower than expected appraisals have been commonplace since new rules, called the Home Valuation Code of Conduct (.pdf), took effect in 2009. But Nelson said a whole new crop of homeowners anxious to refinance while rates are still relatively low are now coming face-to-face with them.

“Appraisers are under regulation and under pressure to be much more conservative because they took so much pressure for inflating values at the top of the market,” Nelson told CBS 5 Consumerwatch.

But some homeowners are striking back against what they believe are unfairly low appraisals.

“We’re seeing a trend with these homeowners getting really assertive,” Nelson said. Homeowners such as Yang, who estimates refinancing would save him about $1,500 a month.

What can homeowners do? Nelson suggests they appeal the decision to their banks. She also recommends trying a mortgage broker who can access a broader range of deals and makes a commission on successful deals. That is what Yang is now trying, hoping for better luck.

(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

Comments (20)
  1. Dawna says:

    I had just had an appraisal done on my home, decided to refi. There appraiser came in $130,000 less then the appraisal I had just had done. Argued the point, the bank paid for an other appraisal, that one came in within 10,000 of my month old appraisal. Got what was true and correct in the end, but it was a fight.

  2. Fif Ghobadian says:

    It is extremely difficult to navigate through the lending maze these days. The key is to work with lenders that provide good rates and also use local appraisers. The best thing clients can do in today’s lending climate is to work with their mortgage brokers. We know which lenders to take certain loans to not only provide the best rate, but to also get a realistic appraisals. Lenders who work with local appraisal management companies such as AXIS will be at an advantage.

  3. Amanda says:

    I understand the frustration of home owners and do agree that an appraisal is only an educated opinion. However I also know that large banks like Bank of America use third party vendors to choose the appraiser and there for have no affiliation with any specific appraisal companies. Best of luck to all those trying to refinance.

    1. Ed Connor says:

      The bank owns the 3rd party vendor. The bank makes or skims depending on your point of view, up to 50% of the appraisal fee. The appraisers they use are not independent at all. They need the B of A appraisal management company jobs or their career is over. Read my post belwo, thanks and good luck. Appraiser rules need to change and the banks and their AMC’s have to get out of ordering the appraisal.

  4. Phrunes says:

    The new rules make the Appraisers rotate or cycle tyhru a call list. Often times this new “improved system” puts appraisers on your loan who are not local and who really do not know the local markets. It’s really sad that the pendulum has swung so far in the opposite direction now. I wouldn’t blame the appraisers as much as the Banks for putting all of the added pressure on them.

    1. Another Appraiser says:

      If Appraisal Management Companies used a rotational ordering system among local appraisers instead of always going with the cheapest and fastest appraiser, we would not be in this mess today.

  5. Scott Sheldon says:

    I simply don’t have this problem. My appraisal management company ensures a local appraiser to the property every time. Mortgage Brokers are a dying breed. They have no control over the loan or the appraisal company like a direct lender does. Not many banks are working with mortgage brokers anymore, for this reason. Our appraisal management co. gives a free valuation comp range “before” doing the actual appraisal. Consumers are welcome to call my appraisal co. and speak to an actual appraiser. Check us out at Sonoma County Mortgages .com.

    Good Luck


    1. Quicksilver says:

      >a free valuation comp range “before” doing the actual appraisal.

      Giving a client a value range IS an appraisal. Obviously, you are another AMC that is part of the problem.

    2. Quicksilver says:

      BTW – giving a “comp check” to a lender is a felony. Care to share your client list?

  6. Nicholas Ballard says:

    The problem with the Appraisal Management Company system (AMC) that the majority of banks relies on is two-fold: the AMC often retains the majority of the fee the borrower pays and the under-paid appraiser has zero accountability and incentive to do a good job. At California Mortgage Advisers, Inc. we are the bank (with multiple lending channels, so banker/broker) and we use Axis Appraisal Management. Axis provides our borrowers with quality appraisal reports, delivered by veteran, local appraisers who are fairly compensated for their work.The appraisal is then accepted by all lenders within our extensive network, allowing us to shop for the best loan. This is a huge advantage and helps to level the playing field.

    1. Quicksilver says:

      >the under-paid appraiser has zero accountability

      The underpaid appraiser is on the hook for ALL of the liability, thanks to indemnity clauses that AMCs routinely extort from appraisers.

      Yes – EXTORT. “You wanna work? Sign this.”

  7. Nevin L. Miller says:

    Actually, the best place to get a mortgage these days to avoid these problems is through a mortgage bank, like California Mortgage Advisors (Disclaimer, I am an agent with CMA). Like a broker, we have access to multiple funding sources, but because we are the actual lender (we sell the loans after we fund them) we are in charge of the appraisal process. We use a local appraisal management company named AXIS who ensures that only local appraisers are used for our clients – and as such we rarely have appraisal problems. I understand the frustration of homeowners who go directly to the big banks – as my team probably closed 20 transactions last year that banks had denied – mostly for appraisal problems. You can check us out at Thanks for reading.

  8. Ed Connor says:

    B of A used their in-house appraiser – an inexperienced appraiser because only an inexperienced appraiser would work for the fees they pay. B of A skims as much as 50% off of what the consumer is charged for the appraisal, so the homeowner thinks they’re getting a $600 appraiser but they’re really getting a $300 appraiser. The recommendations in the video of using using a mortgage broker to contest the appraisal is ridiculous. Brokers do not have valuation experience. What should have been recommended is for the owner to get an independent appraisal form an established appraisal company and pay $600 and get their monie worth. Since the banks have privatized the appraisal professional, these complaints are common from buyers/sellers and refinances. The banks are bait and switching the consumer and it’s for bank profit and they don’t care if it hurts the consumer. Connor Appraisals, Inc. apprazur at comcast dot net.

  9. Ed Connor says:

    And I want to add that an appraisal is NOT just an opinion, it’s a fact based belief put forth by trained and highly educated professionals. .

  10. steve moore says:

    I’ve seen more lame advertising than real comments on here.
    what a joke!
    PS dear homeowner—it’s a hard pill to shallow but this is very much a buyer’s market.
    If you dream otherwise I encourage you to sell your home and cash-in before you lose even more value!

  11. Anon says:

    BOA uses an AMC (appraisal management company) called LSI. In my area a non-complex single family appraisal that does not go through an AMC runs in the $325 to $400 range. In this area LSI pays the appraisers that they hire somewhere in the $175 to $200 range. BOA owns, at least in part, LSI. Guess where the other $150 to $200 is going? Experienced appraisers are dropping like flies because they can’t survive at these salaries any longer. This is mostly due to the implementation of the HVCC (which no longer exsists, however it’s “policies” have been carried over)

    Originally the HVCC guidelines stated that the banks could not own the AMCs. That part was removed right before HVCC went live.

    Better get used to it. The system is here to stay. The banks are not going to let go of their new money stream that skims off of the appraiser’s backs.

    Other than that, this story does not give nearly enough information about the house or its comparables. I can pick out plenty of houses in my town that are older and smaller than others, but are worth much more.

  12. BayAppraiser says:

    BofA contracts out to am Appraisal Management Company (AMC) who then hires the appraiser. The AMC profit model is the spread between what the consumer is charged for and what they pay the appraiser. It is in the AMCs best financial interest to find the lowest cost appraisal provider as it maximizes the spread.

    Like most businesses, you get what you pay for. The AMC business model effectively guarantees you the lowest cost (ies least competent) appraiser will be hired. Broadcast emails are not unheard of where the first appraiser who jumps an an obscenely fee gets to do your appraisal. Appraiser competency is nothing but a sound bite for the AMC and the To Big To Fail lender.

    Oh, did I mention that all of the TBTF lenders own partially or outright the AMC? So when you hand over a $500 appraisal fee, a substantial portion is not going to the appraiser but to the TBTF lenders bottom line. The Truth In Lending Act (TILA) does not require that the lender disclose how much was paid to the AMC and how much to the appraiser. Apparently transparency is not a good thing for all sections of the TILA.

    In conclusion, if you refinance with a TBTF lender you are almost guaranteed to have the services of the least competent appraiser who is hungry for work and will typically service an exceeding large area.

    If you are refinancing, talk to your local lender or credit union and see what their appraisal hiring policy is. Most use a well honed list of local appraisers because, well, it’s their own money they are lending.

    Best to all.

  13. Scott Sheldon says:

    The problem is the for years brokers dominated the marketplace, and oftentimes coerced appraisers to specific values. Banks have taken over and now must need with AMC’s. My AMC backs up their values and clients are free to talk to the head appraiser who signs off the appraisals. We just don’t have this problem. For the best mortgages and lowest mortgage rates visit