How To Dispute A Low Home Appraisal?

A man disputing a low home appraisal value

When selling or refinancing a home, the bank requires an independent appraisal to ensure the property’s value matches the loan amount. Local governments also appraise properties regularly to determine property taxes.

Your satisfaction with a property appraisal may vary depending on whether you’re a seller, a potential buyer, or a taxpayer. Regardless of your role, it’s crucial to understand your options if the appraisal differs from your expectations. Your sales price, mortgage, and taxes could all be affected.

Not all homes need an appraisal. Cash buyers can skip this step, often doing so when home prices are high, and inventory is low. However, if you’re financing your home, an appraisal is necessary. Most housing experts agree that even cash buyers should know the home’s value.

Whether you’re selling or buying, understanding how appraisals work and knowing how to challenge them if necessary is beneficial.

A man carefully checking the conducted home appraisal

If you’re not satisfied with the appraisal of your home, the first step is to understand the different types of appraisals that might have been conducted.

One common method is an online appraisal. Mortgage companies often use this type to reduce costs. An online appraisal involves performing an Internet search for comparable homes (known as “comps” in appraisal terms) and determining the value of your home based on these comps and other factors. However, this method has its limitations. Important details, like a newly renovated kitchen or bathroom, may not be visible online and therefore might not be factored into the appraisal.

Another type of appraisal, frequently used for county assessments, is the drive-by appraisal. In this method, an appraiser takes a current picture of the home and researches comps without actually entering the property. This approach also might miss out on important updates or features inside the home that could affect its value.

The most thorough type of appraisal is the traditional appraisal. Here, the appraiser visits the home, gathers current information, and asks about any recent updates. They then compare your home to similar homes in your neighborhood or town. Traditional appraisals are typically more detailed and accurate, but they can cost several hundred dollars. This type of appraisal is often required when a home is sold to a new owner.

By understanding these different appraisal methods, you can better assess why your home received its particular value and take appropriate action if necessary.

A homeowner appealing to an auditor for his low appraised property

County appraisals determine property taxes based on the current value of your home. If the appraisal seems too low, you might be relieved to know that your property tax bill will also be lower. This is beneficial if you plan to stay in your home for a while.

However, if you intend to sell your home soon, it’s important to take action. Start by contacting your county auditor. Many localities allow homeowners to appeal their appraisals. To do this, gather evidence of any upgrades or remodeling work done on your property. This information can support your case for a higher appraisal.

Real estate agents typically assess your property’s value by researching comparable properties in your area rather than relying on the county’s assessed value. Therefore, the appraisal might not impact your home’s market value as much as you think.

If you suspect that the low appraisal is due to an electronic or drive-by assessment, request a traditional, in-person appraisal. Clearly state the reasons for your request, highlighting why a more thorough evaluation is necessary.

By understanding these steps, you can ensure your property is appraised accurately, reflecting its true value.

A real estate agent and home appraiser discussing the comps used to determine the home's value

If you’re buying a house and the appraisal comes back too low, causing the lender to deny your mortgage, don’t worry—you have options.

First, as the buyer, you have the right to view the appraisal. Collaborate with the seller’s real estate agent to confirm that all renovations, improvements, and major repairs were included in the appraisal. Then, ask the seller’s real estate agent to discuss with the real estate appraiser the comparable properties (comps) they used to determine the home’s value.

You can request that the appraiser review their report based on your own research of comparable homes in the area. If there haven’t been many recent sales, the appraiser might have used homes from different neighborhoods that aren’t truly comparable. Providing the appraiser with accurate information could lead them to reconsider their findings.

Finally, when challenging the appraisal, remember that appraisers are human and may be defensive about their work. Approach the situation respectfully and keep conversations professional. You can also ask your broker for advice on what to say to the appraiser or to act as a go-between.

By following these steps, you can effectively challenge a low appraisal and increase your chances of securing your mortgage.

Yes, home appraisals can sometimes be incorrect. Several factors can lead to inaccuracies. For instance, the appraiser might use outdated information, miscalculate the square footage, or overlook recent renovations. If your real estate agent spots any errors in the appraisal report, you can ask for a revision. It’s crucial to ensure that the information used is accurate to get a fair valuation of your home.

If you believe the appraisal on your home is too low, you can challenge it through an appraisal rebuttal. This process allows you to dispute the appraisal and seek a revised valuation. It’s important to note that this process is only worth pursuing if there is a genuine mistake in the valuation. Providing evidence, such as recent sales of similar homes or proof of renovations, can strengthen your case.

Home appraisal costs can vary. While the typical price starts around $650, it can range anywhere from $800 to $900 for a single-family home. Several factors influence the final cost, including the level of detail required, the size and condition of the home, and its location. It’s important to budget for this expense when buying or selling a home.

Understanding and effectively disputing a low home appraisal can significantly impact your financial outcomes, whether you’re selling, buying, or managing property taxes. By familiarizing yourself with the different types of appraisals and their potential limitations, you can better evaluate the appraisal you receive and decide on the best course of action. If you find discrepancies or undervaluations, remember that you have options: gather evidence, communicate respectfully with the appraiser, and consider requesting a more thorough evaluation. The appraisal rebuttal process, though sometimes challenging, can lead to a fair reassessment of your property’s value, ensuring that it accurately reflects its true worth. As you navigate this process, leverage the insights and steps outlined in this guide to advocate for an accurate appraisal, ultimately safeguarding your financial interests and achieving your real estate goals.

Answer: If you believe your home appraisal is too low, start by reviewing the appraisal report thoroughly. Check for errors, such as incorrect square footage or missed renovations. Gather evidence, including recent sales of comparable homes and documentation of improvements. Then, respectfully request a reconsideration from the appraiser, providing your supporting evidence. You can also consult with your real estate agent or broker for additional guidance.

Answer: To challenge a county appraisal, begin by contacting your county auditor’s office to understand the appeal process. Gather evidence of any upgrades or remodeling that might justify a higher appraisal. Present this evidence during the appeal, along with any discrepancies you find in the county’s assessment. Request a traditional in-person appraisal if you suspect the initial assessment was based on limited information.

Answer: Yes, a low appraisal can affect your mortgage approval, as lenders base their loan amounts on the appraised value of the property. If the appraisal comes in lower than the purchase price, you might need to renegotiate the price with the seller, increase your down payment, or seek a reconsideration of the appraisal. Work closely with your lender and real estate agent to explore your options.

Answer: Effective evidence for disputing an appraisal includes recent sales data for comparable homes (comps), documentation of recent renovations or improvements, and any factual errors in the appraisal report (e.g., incorrect square footage or missing features). Photographs, receipts, and detailed descriptions of the upgrades can strengthen your case. Present this evidence clearly and respectfully to the appraiser or during your appeal.

Answer: The length of the appraisal rebuttal process can vary, but it typically takes a few weeks. After you submit your evidence and request a reconsideration, the appraiser will review the information and decide whether to adjust the valuation. The timeline can depend on the appraiser’s workload and the complexity of the evidence provided. Stay in communication with your real estate agent and lender throughout the process for updates and guidance.

A professional appraiser in his office

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