How to Dispute a Low Home Appraisal

Blog posted On September 06, 2018

You will need a home appraisal when you’re buying a new home, selling your current home, or refinancing your mortgage.  Home appraisals are conducted by an independent appraiser to determine the value of the home.  When you are selling your home and the appraisal comes in lower than expected, you could run into some difficulty including the buyer backing out of the sale or the lender denying the buyer the loan they need to purchase the home.  If you’re selling your home and you get a lower appraisal than expected, here are the steps you can take to dispute it.

Request a Copy of the Appraisal Report – Check the Details

By law, the buyer is entitled to a copy of the appraisal report, however the seller will have to ask for it.  If you get a low appraisal, you can request a copy of the report from the buyer through their agent.  Once you’ve acquired the appraisal report, comb through it meticulously and check for errors.  Did the appraiser correctly report the number of bedrooms and bathrooms?  Seemingly small oversights can lead to big problems down the road. 

Contact Your Lender and Request a Value Appeal

If you have the evidence to prove the appraisal is inaccurate, contact your lender and request a value appeal.  Although appraisers rarely change their valuation, providing the proper documentation to prove your case will help.

Provide Updated Comps

Appraisers use neighboring properties or “comparable properties” to compare your home with the value of other homes that are recently sold.  With home prices on the rise, many regions are experiencing rapid home price appreciation.  If you receive a low appraisal, especially if it’s lower than comparable properties, provide the data to your selling agent so they can let the appraiser know. 

Check on Permits, Upgrades, Improvements

If you’ve completed any upgrades or renovations on your home that could improve the resale value, but did not get a permit for the work, the appraiser cannot consider these improvements in their appraisal.  However, if you did get permits and the appraiser missed the improvements, they may not be able to locate them.  You can access your permits through your county or city government office to submit to the appraiser, so they can correct the discrepancy.

Appraiser Who Doesn’t Know the Area

Typically, lenders work with appraisers who know the local area.  Each neighborhood and community has different factors that influence the value of homes in the area.  Working with an appraiser who usually works 50 or even 100 miles away can lead to an inaccurate appraisal. 

Get a Second Opinion

When you’re selling a home, a low appraisal can cause numerous challenges including a price renegotiation or worse the sale falling through entirely.  Lenders usually work with an appraiser they know may not be willing to work with another appraiser after a low appraisal.  You can still hire and pay for another appraiser and submit their appraisal report.  In some cases, if there is a significant discrepancy, the lender may reconsider.

A low appraisal is a setback, but it doesn’t mean you need to lower your asking price just yet.  Working with a trusted appraiser that knows your local market can ensure you get a fair appraisal for your property and avoid any surprises. 

Sources: Appraisal Buzz, Go Banking Rates