Ryan, Thanks for posting this! This is surely something to put in your toolbox! Appraisals are becoming an increasingly hot topic as sellers are trying to put the depressed values of the past behind them.

This post will be a great complement to our podcast tomorrow, which will be featuring Ryan. Nice work!

This is great advice! Thanks. My wife and I just went through this when we bought our home. The first appraisal came in well over the contract price- but the lender insisted on a review appraisal (our home is in a sparsely populated county, and thus there are very few comparable to choose from). The review came in slightly low. It took a month to get a review appraisal, and the reviewer was not nearly as thorough, and did not go into the house to see the quality of construction that added value (One of the comparables he used was a hunting cabin- complete with plywood siding!- and no adjustment was made for quality of construction). We filed a rebuttal, and I wish I had this advice then. Fortunately, I think I did most of what you are suggesting, and was able to point out several mistakes- ultimately, they only accepted one major clerical error (appraiser did not know the house had central air and heat- this mistake was actually on the original appraisal as well) and it brought the value within $900 of the contract price. I had to pay that to close- the seller couldn’t come down easily because it was a bankruptcy sell, and it would have required additional court approval. The whole appraisal process was a nightmare- and as a result, I have little faith in the accuracy of appraisals in general. Perhaps the process is easier and more accurate in more populated markets… but I have heard plenty of horror stories about larger markets, too.

I hate to be the voice of disagreement in this thread…..however I’m going to be. I’ve been a real estate investor for 20+ years now. Every deal I have been in that had a “bad” appraisal has ended up the same– The appraiser sticking by his appraisal each and every time it was challenged. I’ve seen them questioned with grace and humor and I’ve seen them challenged with yelling and swearing. But I have never had a single appraiser change his opinion when it came to a SFH, even with what I and others considered overwhelming documentation. I get out and away from the appraisal especially if it is a residential situation and move on. (Commercial is a whole different game) It has been my experience it is quicker and more decisive. I’d love to hear from others about their experience with questioning appraisals and their success.

Thanks, Ryan, for taking the time to share this. Very helpful, especially coming from an appraiser!

Thanks, Ryan, for taking the time to share this. Very helpful, especially coming from an appraiser!

Spectacular work again Ryan … this is a phenomenal post. I think prepared, poignant, and polite are the best points to make.

I am an Appraiser and an investor of many years, and have been on both sides of this scenario many times. If an Appraisal has actual mistakes, they should be corrected. What is usually not mentioned is that an Appraisal is not a fact. It is an opinion by a qualified, unbiased third party with no interest in the property. Like any qualified professional, valid opinions may differ. What one party (biased, unqualified, or even qualified) may think is comparable may not be the same as what another unbiased, qualified professional may deem as comparable- and I’m not talking about using REO’s as comps when the subject is a well cared for traditional sale. Another thing noted is that not all attributes or improvements can be adjusted for, as the adjustment amount should be backed by recent factual market data from the subjects market area. If no conclusive data can be found, an adjustment should not be made. If a house backs a major road, there is generally enough market data to make a supported adjustment. If a house backs a park/common area and then a major road, there may not be enough market data to make such an adjustment. In the currently rising market, what I see in the vast majority of rebuttals is biased third parties (usually not the client/intended user) who are upset they didn’t get their sale price/commission & then call it a “bad/low appraisal”. More than 90% of the time, they want the Appraiser to use excessive adjustments or superior sales (gated, etc.) to “bring up” the value in order to make their deal happen. If truly comparable sales to support the sale price are not there, they’re not there. All qualified professionals have their opinion on which way to perform their job (within professional standards) is best. When was the last time someone tried to change your professional opinion? I imagine they would need some pretty concrete evidence in order to do so. Thanks for listening, Paul the Appraiser from Scottsdale.

I had an appraiser call me to ask if a recent sale was a “flip” because he would give it lower value as a comp. He said that flips use lower quality carpet, etc. I assured him that my client did more than simply change the carpets and that he used materials of average to high quality. There wasn’t much convincing him that a flip is not inferior to an owner-occupied home that has lots of wear and tear. I have also had a home I rehabbed given a lower appraisal simply because I “flipped” it. There are those who think we aren’t allowed to work hard and make money.

I’d like to congratulate you on the appraisal challenge form. If there is a valid mistake on an appraisal, then it should be corrected. Most Appraisers will gladly do this if it is pointed out. As an Appraiser, I’ve strongly encouraged my clients to ignore an appraisal challenge unless the challenger includes detailed explanation(s) identifying why the appraisal should be challenged. Unfortunately, none of the appraisal challenges I’ve received include any basis for the challenge. The challenge typically includes comps from a different neighborhood which the challenger claims supports a higher/lower appraised value. The challenger provides no explanation why the original Comps in close proximity to the Subject (and similar to the subject) should not be used as Comps. The challenges have become so bad, that I have started charging a fee to review and respond to a challenge which has no basis. This is beyond the scope of the original assignment and a waste of the client’s time and Appraiser’s time. I fully support the submittal of a valid challenge, but the submittor of an invalid challenge should pay a fee for this review service. On another note, I’d also like to address an interested party submitting info to the Appraiser. I encourage any interested party to provide any relevant info they have on the Subject property to the Appraiser. This info must be submitted to the Appraiser when the Appraiser begins the assignment and makes the first contact. If the Appraiser does not explicitly ask for the info, the interested party should volunteer their info. The Appraiser needs this info when they begin their research, not when they are doing the inspection. The Appraiser will base their research (and Comp selection) on the available Subject info at that time. If the Appraiser’s info is incorrect (i.e. wrong GLA, year built, features, etc), then the Appraiser may have to re-do the research, Comp selection, Comp inspection, etc. This can be avoided by providing your info to the Appraiser up front. Any issues with the Subject property should be identified as early as possible in the Appraisal process.

Nice article. I have an appraisal tomorrow on a property. One thing that I do not particularly care for is that the appraiser is located over and hour away from the property. Im in a large coty while the appraiser ia from a small rural town. They’ll likely already have their minds made up about comps when they come to appraise my property. I’m guessing the odds are small that they’ll come back to town ilover the weekend or early next week if I give them some supporting data of potential additional comps. Hopefully the appraiser is familiar with the neighborhood and the school district. If you go east, it’s a comparable neighborhood… If you go south, it’s the same school district but the neighborhood and prices are not as nice. It’ll be interesting. Thanks again for the article. Any advice you have for when I meet with the appraiser tomorrow? Reply Report comment

Nice article. I have an appraisal tomorrow on a property. One thing that I do not particularly care for is that the appraiser is located over and hour away from the property. Im in a large coty while the appraiser ia from a small rural town. They’ll likely already have their minds made up about comps when they come to appraise my property. I’m guessing the odds are small that they’ll come back to town ilover the weekend or early next week if I give them some supporting data of potential additional comps. Hopefully the appraiser is familiar with the neighborhood and the school district. If you go east, it’s a comparable neighborhood… If you go south, it’s the same school district but the neighborhood and prices are not as nice. It’ll be interesting. Thanks again for the article. Any advice you have for when I meet with the appraiser tomorrow?

Nice article. I have an appraisal tomorrow on a property. One thing that I do not particularly care for is that the appraiser is located over and hour away from the property. Im in a large coty while the appraiser ia from a small rural town. They’ll likely already have their minds made up about comps when they come to appraise my property. I’m guessing the odds are small that they’ll come back to town ilover the weekend or early next week if I give them some supporting data of potential additional comps. Hopefully the appraiser is familiar with the neighborhood and the school district. If you go east, it’s a comparable neighborhood… If you go south, it’s the same school district but the neighborhood and prices are not as nice. It’ll be interesting. Thanks again for the article. Any advice you have for when I meet with the appraiser tomorrow?

Hi Ryan, When I was appraising I was in the Bay Area (Mission Group Appraisal) so we may have done a few places in the same area… I don’t know how it is now but back then vis a vis about 8 years ago, I would go up to Sac from the Bay Area quite regularly! I have seen the issue from the perspective of Appraiser, Broker, Investor and quite frankly? a lot of the problem starts with the Appraisal situation because of where the appraisal takes place on the chain of events regarding the sale. An appraiser has tremendous liability and responsability and….there are some great appraisers and some god awful appraisers. For example, I well remember the kid who came for a refi of ours….our property being a Victorian in a neighborhood of Victorians which should have been a clue? So when the appraiser went out of the hood for comps and called our Edwardian A contemporary…well I screamed at the guy who trained the kid and asked him why he is sending an obvious newbie to a property that was at least worth a Million (a no no) among other things. I am ashamed to say that I also asked him such delightful interogatives as “do your appraisers always wear shades at all times, snear and conduct themselves as though you are privaleged to have them present? (palm slap) Here is the thing: Appraising being an opinion is not absolute. Because of this fact we are always in a sense talking about a range of values into which a subject property falls (of course not an average! a range) …. To be clear this allows appraisers to consider the condition of a residence, the updating, etc. No appraiser is capable of giving a value for a property like “that house is worth two hundred & thirty six dollars and ten cents!” What this means practically speaking is, if an owner, client, broker etc asks about value, or tells me that the value is low, I can always reconsider. Why? because…..my opinion about value is in a sense, an opinion about the range of values justified by my appraisal. I can see if my comps, adjustments and data on the hood, boundries, etc CAN in fact justify a greater value. During a sale if the sales price is not outrageous and if adjustments are consistant in the comps…then maybe I can reconsider the range point of value for the subject property. Consider: If a person wants to purchase a house for 300K and all things being equal every house in the area (and adjacent areas) has sold at most for 200K…..this is an issue of value that pretty much cannot be reconsidered….If my comps are legit, and if data research does not point to a sudden rise in value, then the highest range of value in any comp can hardly reflect this sales price. On the other hand if I have 3 comps that fall between 275 and 300K then perhaps I can also maybe see if the comps are saying that a two car garage, a corner lot, etc make the properties’ value reflected better in a different comp, more similar to sales price. My point here is that a good appraiser should have no problem reconsidering a change of value IF this value can be justified in the comparables & research. A bad appraiser often does a few things that I noticed in my experience: a) they assume that the value they adjusted for is absolute and not a point on a range of values….values that are all justified on a scale (superior, inferior, etc) depending on things that are not absolutely “knowable…” things like the value of an amenity, location, etc…which can vary and which the comps will show you if youhave good comps! b) Bad Appraisers often do bad research….screwed up boundaries, lack of understanding what the sales history, the amount of listings, etc allows one to deduce. c) Bad appraisers are also often emotionally immature and let ego dictate that the value he/she chose has to be right…Sound familiar to some of your horror stories? often these appriasers are judgemental….Consider this scenerio and I bet Ryan has had this experience. Basically you go to house..we will call it house A which is clean, has a great pool, a jacuzi in every bathroom……and the owner happens to be a beautiful five foot seven blonde who tells you how she takes such great care of the house….And then we go to house B which has holes in the walls, garbage everywhere, the owner sort of shuffles around….. Which tells us absolutely nothing about which house is more valuable! I.e. curb appeal is for agents not appraisers….the kid who did my home mentioned “curb appeal” a few times in the report….It can be noted, but when it becomes a biase there are problems. Anyhow I know this is a long post but this is an important issue Ryan brought up. In summary because value is not absolute any value can be looked at and there is in practice always a range of values for an appraiser to look at when utilizing the sales comparable approach…the approach used for many residential properties. It is a crap shoot but perhaps the first indication that you got stuck with a bad appraiser is the refusal to reconsider the value of an appraisal…In my case? this kid did not want to reconsider. I had to threaten his boss with a board compliant at which time I was given a refund….To be clear I did this because I did not want people, such as investors here, to be stuck with a shitty appraiser.

This is a timely article for me. We sold our home here in the Los Angeles area, in a market that is heating up quickly. It sold in ONE DAY for 6K over the asking price. The problem for us has been comps. Our part of town is so popular (near Whittier College, in the hills), that people basically don’t move. And as with many neighborhoods in foothills, the price goes up 10’s of thousands of dollars with each block that goes up the hill to the million dollar home a few blocks up. I knew we were in trouble when the first thing the appraiser said to our agent was a sarcastic, “Where did you get that price?” Easy – a buyer thought it was worth it. He seemed bent on “setting us straight” on what our home is worth. Other houses in the area are sold (pending, not closed) for around the same price for similar homes. So we have a case of perhaps half-a-dozen homes, all snapped up by eager buyers, who, in a true free market, are setting the prices (not the sellers), and they are all almost certainly doomed sales, owing to appraisers who either don’t know the area or don’t know what their doing. Our appraiser glibly informed us we needed smoke detectors in the living, and near the kitchen. Anyone familiar with the fire code knows that is false. The appraisal came in 75K under the selling price. It’s almost certainly going to kill our deal, Quite frankly, I don’t feel like being cordial or polite with this idiot. I don’t see how you can have six houses, all pending for nearly the same price (same sq ft, lot size, etc.), yet are magically worth less because an appraiser is “reporting the market.”

Ryan, Thanks for your help in posting this. I have an issue where the appraisal value was fine but a time sale adjustment was applied to my comps that sold in December. They hit me for 3.5% or 7% annualized. Part of my problem is that half my town is in a flood zone that has had recent flooding and crushed the property values in that section. My house however is not in a flood zone and prices in those parts are increasing. I was told the stats they use cannot be broken down by sections of my town. I think this is unfair and taking away from the actual value of my house. Not sure the lender will care about my argument since I have no true way of proving this out. All houses of like quality, size and location have been consistently selling well but most of the comps are 6 months old. Kind of in a bind with this one. Do you have any insight? Eric

I have had several low appraisals this year, in once case, both realtors cut commission to get the deal done, then 4 weeks later, another appraiser calls me and says “I’m using your house as a comp on another house, why did it sell so low? Was the seller under duress or did the house have a major flaw?” I explained to him that the house ws in great shape, finished basement, lots of great tile work, the appraiser was stubborn. It seems to me a second appraisal should be allowed. PS…the appraiser used a comp 8 months old even though others were available….

We are in an area of average or value priced homes. The average home price is $250,000 to $300,000 and that is for a home on 0.4 acres with 3/4 bedrooms and 3 baths on 2800 square feet. The location is great for many reasons but proximity is probably the best. There are small pockets of larger homes build in the last 6 years on larger properties in the city which is very rare. We were lucky enough to find a 2.4 acre site on a dead end street. All the homes are new construction with an average build price of $700,00. Now to the problem. Since all the homes are new construction all the houses in our price range have never sold. Actually over the past 10 years you can see in the small pockets luxury homes that they were all built but never sold. The county appraises these houses for great amounts for tax reasons but because that is not a recent sale they are not used for a comp. There has been a few houses listed that never sold to which I found out was because they couldn’t get a decent appraisal. If the new rules call for recent sales of like homes in the same community how can one sell to start the process and get a decent appraisal? I have actually found out since that all the new construction is averaging 50% of the build cost for the appraisal. This is requiring everyone to come up with 50% down plus closing. How can one community reinventing itself ever get out of this vicious cycle? We are unfortunately stuck in it as we can’t get the appraisal we need to move forward. Any advice is appreciated.

Here’s a good one. I haven’t tried to dispute it yet… right now I’m still in the simmering stage. I live in a townhouse corner unit. Units are back-to-back, so only the corner units have windows on two sides. Corner units also have more bedrooms, bathrooms, and overall square footage. Middle units are 2 br, 1.5 ba, 1500 sq ft, while corner units are 3 br, 2.5 ba, 1800 sq ft. My townhouse was appraised at a value $5,000 LOWER than middle units sold only 2 months ago IN THE SAME BUILDING. Does that make any sense?

Hello Ryan, We live in NC, and recently had an appraisal done on our purchased lot and house plans. The house is a 2375 sq ft all brick with stone accents 2 story house with vinyl shakes for a craftsmen look. The house will have a full 1636 sq ft walkout unfinished basement. The house will have 4 bedrooms 2 1/2 baths and side load garage. The rest of the house will feature granite in the kitchen, tile floors in baths/laundry, carpet in bedrooms, and hardwoods everywhere else along with crown molding and rounded wall corners and archways. The back of the house will have a 12×20 deck, and covered a smaller covered front porch. The garage is 606 sq foot. The appraise used “builder cost estimates and appraisal files” for information and the numbers were: $24,000 opinion of site value(which is what we paid for the land), 2375 sq ft @ $95 per ft=$225,625, basement 1636 sq ft @$15 per ft=$24,540, garage 606 sq ft @ $20 per ft=$12,120, *As is value of site improvements(which were told is well, septic, permits, lot clearing, etc=$20,000. The total came to $306,300 for both house/land but our contractor was charging us $305,000 to build the house. After meeting with another builder who told us that was a fair price to build the house he brought to our attention the many inconsistencies and compared some recent appraisals he had done for houses he was building. He noticed the very low prices for both the basement sq foot price, garage, and the lack of evidence of value for both the front porch and deck which was on all of the appraisals he had. He also thought the $20k for site improvements was too low, and questioned why after the improvements were done the site value didn’t increase. We are wanting to get another appraisal but we know that the bank will only offer appraisals done through their people, and there is no guarantee they will accept the new appraisal. Sorry for the lengthy comment, we don’t know what to do at this point. Any help you can provide will be great. Thank you very much in advance.

Hello, Thanks for responding, not sure if its ok to just answer with an email, but I’ll give it a shot. The appraisal was done by the credit union where we’re trying to get a loan through to finance our new construction. The 3 comps the appraiser put on the appraisal were strange as well. We we’re very confused with the adjustment portions, because two of the three comparisons only had 3 bedrooms instead of 4 like our plan, as well as one of the houses not even having a basement where our house will have a 1636 sq ft. full basement. The cost approach didn’t add up according to our contractor either, I hope the numbers that I provided weren’t confusing. Thanks for the reply, Look forward to hearing from you,

Ryan is there a professional board in California that takes complaints about appraisers? We recently received an appraisal for a refinance. Instead of choosing comps from 20 recent sales from our subdivision, the appraiser picked 2 of 3 properties in nearby subdivisions. He ignored 2 sales around the corner (almost same location as us but on the next cul de sac) and 2 recent sales of the same exact model! All of these sales were in the last 3-6 months and were $70,000 higher than his final number ($905,000). I certainly can understand going outside the subdivision when you have nothing recent nearby, but that doesn’t make sense here. So the way I see it he is seriously incompetent or otherwise deliberately picked the lowest properties he could find (within 1 mile rather than .1 mile) in order to tank the sale.

I’m looking for a little help with an appraisal rebuttal. I’m refinancing my home which I just completed a major remodel and addition. I paid for the renovation with cash and am hoping to get much of that back with the refinancing. However he appraisal came back low with the 3 comps being used coming from a. Different neighborhood than mine. The comps are 1 mile to 2.2 miles from my house. I have found comps much closer (even .1 mile away) that support a much higher value. The 3 comps used cross over a major highway putting the comps used in a very different neighborhood. My bank encouraged me to challenge the appraisal and I need to provide 3 new comps. My problem is I have too many to choose from. I really don’t know why the appraiser didn’t use closer comps, but my question is this. Do I use comps that are more close to my sq footage but a further distance away or use the closer comps that may be larger than my house? And by large, I mean they are 15% or less more square footage. The original appraisal used all comps with lower square footage than my house (3%-14% smaller.) For success I’m thinking I should use the houses most similar in sq ft to mine even if they aren’t the closest (even though they’re closer than all 3 comps used in the appraisal!) thanks, in advance, for your help.

Ryan, thanks for the quick follow-up! I really appreciate it. My lender is helping me a little, but I’m more passionate about this than they are. One of the comps I found does appear to be a private sale, so I presume I should NOT use that one. How big of a deal is it if a comp is two story and my house is one story but the square footages are comparable? Thanks!

Ryan, thanks for the quick follow-up! I really appreciate it. My lender is helping me a little, but I’m more passionate about this than they are. One of the comps I found does appear to be a private sale, so I presume I should NOT use that one. How big of a deal is it if a comp is two story and my house is one story but the square footages are comparable? Thanks!

I know that this article was older, but I just had to post what another investor and I are going through now. We bought a property to flip in February. It is in a rural area, not many appraisers. The house was a HUD and they did their own appraisal in December. They gave us this appraisal when we went under contract. Now we are selling the property and the appraisal came in $35k less then contract price and only $15k over old appraisal price. However it was the same exact appraiser on both properties and he used 3 of the same comps on both appraisals with major discrepancies. Discrepancies with the same exact comps: 1. OLD NEW * Site (Land) $0 + $14,400 * Basement/rooms below grade – $13800 – $44,830 *Barn – $20,000 – $30,000 *Net Adjustment – $19,200 (no land value added) – $23,670 (includes land value!) *Adjusted Sales Price $275,800 (no land value added) $ 271,330 (includes $14,400 added for difference in land!) Without any repairs made, without the $14,400 adjusted land value the old comp is still higher!! Just adding the correct land valuation to the old comp makes the adjusted sales price $290,200. 2. OLD NEW *Site (Land) $0 + $12,600 *Quality of Construction Adjustment + $57,600 + $43,200 *Net Adjustment + $14,680 (no land value added) + $7880 (with $12,600 added for difference in land!) *Adjusted Sales Price $259,280 (no land value added) $252,880 (includes the $12,600 added for difference in land!) Without any repairs made, without the $12,600 adjusted land value the old comp is still higher!! Just adding the correct land valuation to the old comp makes the adjusted sales price $272,280. 3. OLD NEW *Site (Land) $0 + $27,000 *Basement/Finished Area – $19,800 – $23,400 *Barn – $20,000 – $40,000 *Net Adjustment – $67,000 (no land value added) – $79,940 (with $27,000 added for land!! Almost $40,000 difference in same exact house!!!) *Adjusted Sales Price $293,000 (no land value added) $280,060 (with the $27,000 added for land!) Without any repairs made, without the $27,000 adjusted land value the old comp is still higher!! Just adding the correct land valuation to the old comp makes the adjusted sales price $320,000. Plus took off the top 10% on listings for expected sales price when the median sale % to listings is 98% for last 6 months. Very frustrated. At this point still no change to appraisal.

once that posted the numbers jumbled. 1. OLD: $0 for site, -13800 for basement/rooms, -20,000 for barn, -19,200 with no land value 1. NEW: +14,400 for site, -44,830 for basement, -30,000 for barn, -23,670 which does include the adjustment for land! 2. OLD: $0 for site, +57,600 for basement/rooms, Net Adjustment +14680 with no land value 2. NEW: +12,600 for site, +43,200 basement/rooms, Net Adjustment +7880 which includes the land value. 3. OLD: $0 for site, -19800 for basement/finished, -20,000 for barn, net adjustment -67,000 3. NEW: +27,000 for site, -23,400 for basement/finished, -40,000 for barn, net adjustment -79,940 Again, same exact sold comps by same exact appraiser, 6 months apart.

Ryan, Just recently my appraisal came in extremely low for our home. We live on 9.7 fenced acres with a horse set up. The appraiser took into consideration the home but not the rest of the property. His comps were other ranch homes but nothing with acreage, let alone the amenities that we have. Two years ago we had the home appraised for a refinance that came in at $280,000. How could our property depreciate that quickly? I’m very confused and is it worth fighting at this point since it is an opinion. All I know is that I am out $500 and could be flipped in my mortgage if that is what it is truly worth. Any suggestions?

This is very helpful. Thanks for this great article Ryan

This is very helpful. Thanks for this great article Ryan

Speaking of bad appraisals (or appraiser in this case). The appraiser got the year of my house wrong. She put 1968 not 1986 (not just a typo, she also put it in wrong under age too). She got the square footage wrong and left off the 256/sqft sun room. It’s incorrectly listed on my property taxes as a three season room (an error I’m not about to have fixed). She made specific note that it’s a 4 season room and counts towards the houses livable square footage but forgot to add it into the total. She left off the attic in my house, left off a shed, reported the wrong type of AC system (mine is a more efficient heat pump system). She said my basement with a full functioning kitchen, full finished functioning bathroom, 8′ drop ceiling, insulated sheetrock walls (parts need Sheetrock repairs) is only 10% finished because it has a concrete floor. Every single comp she used was smaller with less land and 4 out of 5 were significantly older too boot. I had another appraisal done for a refinance 2 months earlier who did not make all those mistakes and it came in 40K higher. Sigh…

I offered $155,000 on a ground level condo in St Louis, MO. My offer was accepted. Everything was going smoothly until the appraisal. It came back low at $142,000. I have appraisal contingency on my contract, which gives me the right to terminate and walk away. Since I am only borrowing $50,000 the lender has no issues loaning me the $50,000in despite of the lower appraisal. I, on the other hand do not want to put down $105,000 on something that’s overvalued. The sellers agent is asking for a second appraisal at their expense. If the second appraisal comes higher, would this hurt my negotiation with the seller and most importantly, can I still terminate the contract based on the first appraisal? I must also add that the appraisal was local, took pictures of the inside and outside of the unit, and did 5 comparable units within a mile. Two on the same street. I like the house but I am not willing to pay more than the appraisal value. I may consider $145,000. The seller keeps saying that the ground level is premium and since there’s not been any ground level units in the appraisal report, the appraisal value of $142,000 is crazy. One can make the argument that ground levels have less light, more security risks and more noise level since theres someone living above you. This is a tough situation and difficult to decide. Do I say ok to the second appraisal to be conducted en though the Lender is not requiring it? If it comes higher, will I be legally binded to the contract and lose my earnest money based on higher second appraisal? Should I make an offer of $145 and see if the seller counteroffers? Thank you in advance for your advice. Regards, . Dee

Hi Dee. Thanks for the comment. I have a few thoughts for you. First, it’s hard to say what the result will be of the second appraisal. What if the second appraisal is not credible, but higher? What if the second appraisal comes in lower? Who is choosing the second appraiser? I can’t give you any specific advice about whether you would be legally bound to the contract or lose your deposit. Your agent and/or an attorney would probably be the best voice on that matter. Regarding value though, the proof is in the market whether there is a premium for the single story unit or not. We tend to say things like, “there is a premium for a corner lot”, or “there is a premium for a single story”, or “the court location is always a premium,” etc…. The best way to know if there is a premium though is to find similar sales, and let the sales do the talking. Did they sell for more or not? Sometimes we bring in our assumptions into a transaction, but the market could easily prove us wrong. Yet other times our assumptions or instincts are correct. Again though, it all comes down to the data. In this case, it is best to find some recent single story sales and then compare them to other two-story sales at the time of their sale. Even if the sales are older in age (even much older such as 1-2 years), this can still provide a context. If we look back in time and find all single story sales really do sell at a premium compared to two-story sales, that can be telling of the market. Thus comparing a 2-story unit to the subject property might undervalue the property. Yet if there is no adjustment needed based on analyzing historical sales in the subdivision, that’s just the way it is, and the idea of “a single story is premium” may not be true. One of the things you can ask yourself as a buyer is what replacements are available for you right now? What else can you buy at $155K or $140K? That may help you decide what you are willing to pay.

Thanks for all of this valuable info. I just used this to submit an appraisal rebuttal. The appraisal came back $3,500 light and the sellers are using the funds from the sale to purchase so they need the full value. Crossing my fingers!

Hi Ryan, I’m currently dealing with this process as a first time home buyer. Here’s my current situation. The house I am under contract on was listed for 130k. We came in high at 140k with full sellers assist from the seller. One appraisal came in at 135k and the sellers were still fine with everything. Well since the 2nd came in at 131k, the sellers do not want to pay as much towards closing and i’m not in a position to pay more out of pocket. My realtor feels hopeful since we have another appraisal already 4k higher, that our appeal will be accepted. It’s frustrating to me how 4k can be the deciding factor. All we need is for the house to be appraised at 135k and everyone is happy. I can’t help but read these comments and feel nervous. I really don’t want to have wasted a couple months of my time and $1000+ in inspection / appraisal fees.

Hi I just got my appraisal back as I wanted to do a cashout refinance and my apprasial came back 60000 dollars lower than what I paid for the home in 2008. My house was custom built brand new and since that time their has been a # of houses built in my neighborhood worth more than my house. And my house I paid 389000 for it and the VA apprasial came back at 330000 dolkars. Should I ask for rebuttal and challenge this decision as my finance lender advise me that I should but I don’t know what am looking for to challenge this decision. Thanks for any help you can give me Lacher.

This is a strange appraisal. We refinanced in 2011 for lower interest rates, mortgage 165,000. Property appraised. Now in 2016, with the interest rate cut further (in half) we refinanced again, 130,000. (70,000 interest saved, cut down to 15 yrs. with mortgage payment the same as the old payment) THE SAME APPRAISER DID THIS APPRAISAL. Despite 2 new bathrooms, 1 new kitchen, new dining/living room & rugs, new windows/doors, new landscape, generator, new burner, new appliances ignored. he appraised it at 395,000. (100,000 lower than in 2011)……THIS IS A LAKEFRONT PROPERTY, WITH BOATING RIGHTS IN A PRESTIGIOUS NEIGHBORHOOD. Is it the bank’s intention/hope for default, to sell to an insider at a low price & then flip for a profit? I know I can sell for 800,000 privately. We got the mortgage, but should we challenge this appraisal?

Ryan, Thanks for your easy to follow approach. I successfully used your form letter to appeal low appraisals on 3 duplexes. Last week, I got my appraisals in and they were about 12% lower than what we expected. This could have been low enough to blow up my refinance. I studied the reports and found a couple of mistakes. The appraiser counted the bathrooms as 1.1 instead of 2.0. He also didn’t adjust the comps for lack of garage. A few days after submitting letters, just as you suggested, I got new appraisals back. They were adjusted up by about 10%, enough to move forward with closing this week!

I am currently going through this issue with a home I am trying to sell. I find the information useful however discouraging based on most outcomes. The recent appraisal came back really low as compared to the comps our agent pulled and Zillow. The comps the appraiser chose really do not appear comparable, ie: over 6 months old, more than 10% less sq. footage, no garage, condition of homes. There are plenty in our area to pull from. It also shows they did not consider any of the upgrades made to the home. In fact the form states no updates were made in prior 15 years. Just in the past three we replaced the roof, added a deck, replaced all the flooring and finished fencing in the back yard. We are going to take a shot at doing a rebuttal this week and will let everyone know how it turns out.

Thanks for the article Ryan. I just had my house appraised in hopes of terminating my PMI 20 months early. We had it built 4 years ago and this appraisal is $5,000 less than the first. The PMI agreement states that the appraisal can’t decline from the original, so I’m sol. However, this appraiser used comps that are over 20 years older than my house and did not adjust for that. Have you ever heard of that before? He also valued a 1200 sq.ft. unfinished basement at only $6000. There were a few other points I made as well asking for an explanation. If I don’t get a response, is there a state official I can contact. I’m in Indiana. Thanks!

Hi Ryan, Thank you for the helpful article. I wanted to ask one question before I go through the process. I am in Colorado, I have a fully finished 1200 sq ft Studio/ workshop next to the house. The last appraisal gave this building no value. Is it worth my time to contest the appraisal? Thank you for your time, Mike Penfound

Hi Ryan, Thank you for writing this article. I am hoping you can give some of your expert advice on my current situation. We are purchasing our first home, and we are supposed to close on it in 4 days. We received the appraisal report and it is significantly lower than everyone expected. We were present for the appraisal and the appraiser said “this is a great house you have at a great deal, this will be a difficult appraisal to do.” He said that because right now in the Hampton Road area of Virginia, Houses are being sold faster than they can be listed. Many people are offering at much higher than the list prices. The neighborhood that we are buying in, doesnt have many houses for sale at all, and if they are for sale, they are listed at 250k+. We are purchasing a govt. owned HUD home that is in excellent condition that needs no repairs. Hardwood floors throughout, 1400sq. ft, large back deck and front deck, single story w/1 attached garage, granite counter tops, newer appliances, built in 1984, 3bed/2bath with remodeled kitchen and bathrooms. The house was listed at 110k, we offered 130k. The tax assessed value has been consistently around 175k for the past 4 years. Everyone we have talked to said we got a steal on this house since we spent 6 months trying to buy something that was just in livable condition under 175k was hard to come across. The appraiser “played it safe” and appraised the house for 135k just to make sure we get the loan. We had planned with the lender to eliminate PMI after the first 12 months since we would have 20% equity almost instantly. There were 6 comps listed in the report, all but 1 were completely incomparable combs being 300 sq ft smaller, 10-15 years older, no garages or decks, or they needed complete remodeling and they were directly listed as “fixer uppers”. the only similar one was listed at $171k. After doing my own research for single story houses with attached garages, 3bed/2ba remodeled, built 1980-1990, in the 23602 area code, 1300-1500 sq ft., and that have recently sold within the past 9 months(same time span that appraiser chose houses from) or that are currently on the market. I found way better comps that look much similar with inside and outside appearance and features at the price of approx $160-$190k. One of which was almost identical to my house and was on our exact road. (That’s the big one that I don’t understand why it wasn’t included in the comps since its a few houses down from ours. ) It is possible that he just lackadaisically just threw down the number 135k because he knew it was clearly worth that, and it would allow us to complete the loan process but didn’t want to look for better comps that would raise the value? Is the tax assessed value a good leg for me to stand on in my argument? My problem is that we paid $500 to have the house appraised, The lender chose this appraiser. Is it unheard of to prove the appraiser wrong and get a refund so we could go somewhere else and have it correctly done? Thank you so much for your time, so sorry this is lengthy, I have read some of the comments above and i know you have said it is up to discretion of the appraiser but I mainly want to know if I have a good argument with the situation given.

Hi Ryan, Thank you for writing this article. I am hoping you can give some of your expert advice on my current situation. We are purchasing our first home, and we are supposed to close on it in 4 days. We received the appraisal report and it is significantly lower than everyone expected. We were present for the appraisal and the appraiser said “this is a great house you have at a great deal, this will be a difficult appraisal to do.” He said that because right now in the Hampton Road area of Virginia, Houses are being sold faster than they can be listed. Many people are offering at much higher than the list prices. The neighborhood that we are buying in, doesnt have many houses for sale at all, and if they are for sale, they are listed at 250k+. We are purchasing a govt. owned HUD home that is in excellent condition that needs no repairs. Hardwood floors throughout, 1400sq. ft, large back deck and front deck, single story w/1 attached garage, granite counter tops, newer appliances, built in 1984, 3bed/2bath with remodeled kitchen and bathrooms. The house was listed at 110k, we offered 130k. The tax assessed value has been consistently around 175k for the past 4 years. Everyone we have talked to said we got a steal on this house since we spent 6 months trying to buy something that was just in livable condition under 175k was hard to come across. The appraiser “played it safe” and appraised the house for 135k just to make sure we get the loan. We had planned with the lender to eliminate PMI after the first 12 months since we would have 20% equity almost instantly. There were 6 comps listed in the report, all but 1 were completely incomparable combs being 300 sq ft smaller, 10-15 years older, no garages or decks, or they needed complete remodeling and they were directly listed as “fixer uppers”. the only similar one was listed at $171k. After doing my own research for single story houses with attached garages, 3bed/2ba remodeled, built 1980-1990, in the 23602 area code, 1300-1500 sq ft., and that have recently sold within the past 9 months(same time span that appraiser chose houses from) or that are currently on the market. I found way better comps that look much similar with inside and outside appearance and features at the price of approx $160-$190k. One of which was almost identical to my house and was on our exact road. (That’s the big one that I don’t understand why it wasn’t included in the comps since its a few houses down from ours. ) It is possible that he just lackadaisically just threw down the number 135k because he knew it was clearly worth that, and it would allow us to complete the loan process but didn’t want to look for better comps that would raise the value? Is the tax assessed value a good leg for me to stand on in my argument? My problem is that we paid $500 to have the house appraised, The lender chose this appraiser. Is it unheard of to prove the appraiser wrong and get a refund so we could go somewhere else and have it correctly done? Thank you so much for your time, so sorry this is lengthy, I have read some of the comments above and i know you have said it is up to discretion of the appraiser but I mainly want to know if I have a good argument with the situation given.