How to Challenge a Low Appraisal (Advice From a Real Appraiser)

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A few years back while visiting the ER I found out I was allergic to the drug Phenergan. I felt absolutely awful, so when the nurse offered me a drug and said it would help, I was game for that. But as soon as Phenergan entered my bloodstream, I began to shake violently in the hospital bed. It was surreal because I had zero control over my body and felt like I was having a seizure. It really freaked me out, but I think my brother beside me was even more shaken as he watched things unfold. Thankfully the on-duty doctor was able to inject some Benadryl in my system to stop the allergic reaction.

Okay, so maybe my reality in that moment of being utterly unable to control the situation isn’t a perfect analogy to talk about appraisals, but there is something to be said about putting so much sweat and capital into making a deal work, but then an appraiser controls the destiny of the transaction because of a butchered value. I’m not talking about an appraisal that doesn’t meet your sales price, but a value that is plain and simply legitimately too low. There can definitely be a sense of powerlessness when that happens.

Rebuttal Tips and a Document for You: There are many articles on BiggerPockets about dealing with bad appraisals, but I’m pretty sure this is the first one from an actual appraiser. Today my goal is to provide you with two things. First, let’s talk through some tips for putting together a rebuttal. Second, let’s look at how to format these tips into a document you can use in your business whenever you need to challenge an appraisal.

QUICK TIPS for challenging a bad appraisal:

  1. Write it down: Make sure you write out your thoughts in a logical manner so the lender and appraiser can listen to your reasoning.
  2. Novel: Don’t write one.
  3. Filter Thyself: Leave name-calling and finger-pointing inside your head.
  4. Provide specific support: Be specific about why the value opinion is different in your mind. The appraiser might have made some clerical errors, but focus on critiquing the meat of the appraisal, which is really comp selection and adjustments given (or not given).
  5. New comps: On top of picking apart the comps, make sure to supply 1-2 other sales for the appraiser to consider. Be sure they are truly competitive, which means they shouldn’t be twice the size or located in a superior area. Would a buyer consider purchasing the comps as a replacement for the subject property if the comps were still on the market? That’s what competitive means.
  6. Be humble: You might be right, but you could also be wrong.
  7. Bullet points format: Organize your thoughts into 5-10 specific bullet points so the appraiser and lender can easily digest your reasoning. Avoid lengthy paragraphs and emotional points void of logic and specific data. The first few bullet points ought to be Comp 1, Comp 2, Comp 3 and then whatever else might be relevant.
  8. Ask questions: After you present a point, ask the appraiser to explain why certain adjustments were made or not made. As an example, “Comp 2 is located next to a gas station, but no adjustment was given. This may have been a clerical error on the part of the appraiser. Why did the appraiser not make an adjustment for an adverse location?”
  9. No pressure: Remember to not pressure for a higher value. Stick with the facts and try to help the market speak for itself. You are asking the appraiser to reconsider the value, not meet your sales price. In fact, don’t even suggest a minimum value for the appraiser to meet. With some focused communication, you can provide support for a higher value without saying, “it’s worth at least X amount”.
  10. Opening Paragraph: “After reviewing the appraisal for [address]by [appraiser], we would like to request further clarification and investigation by the appraiser. We would like to ask for a reconsideration of value based on the following points:”
  11. Closing Paragraph: “We would humbly ask the appraiser to take a second look at the information above as it relates to data and adjustments in the appraisal report. We appreciate your time and consideration, and please let us know if you have any further questions.”

A REBUTTAL FORMAT TO DOWNLOAD: Now let’s put all the points above into a simple format so you can save it to your desktop and then use as needed whenever you have appraisal issues. See the image below or DOWNLOAD a WORD DOC or DOWNLOAD a PDF (the downloads have a detailed example rebuttal too).

how to challenge a low appraisal

I hope this was helpful. Anything you’d add or any stories to share on successful appraisal rebuttals?

Photo Credit: ogimogi via Compfight cc
Photo Credit: dok1 via Compfight cc

About Author

Ryan Lundquist

Ryan Lundquist is a certified residential real estate appraiser based in Sacramento, CA. He provides appraisals and valuation consulting for a variety of clients including CPAs, attorneys, investors, home owners and lenders. Ryan is an avid blogger, bike rider, optimistic doer and family man with two sons.


  1. 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.

    • Thanks for sharing the story James. I’m sorry to hear things unfolded that way. It sounds like the values were so close. I’m wondering why the lender would give so much weight to a review review appraisal that did not involve an interior inspection (not to mention the plywood cabin issue and error with CH&A). That seems like a silly guideline. It can make a huge difference in value to inspect the interior, understand the layout and know the quality of construction and condition too.

      I do think you’re correct about populated markets, though there are horror stories in every market.

      • My area is very populated, but the appraisal for my condo came back $100,000 lower than I expected that is $60,000 lower than the minimum I hoped for.
        Two chosen comparables are both in the worse part of the area that is not even our neighborhood. The third one is on the same street, but is 2 bedrooms/2 baths, however, the appraiser listed it as 3 bedrooms/3.1 baths and adjusted its price down for my 4-bedroom/3 bath property for not having 0.1baths. There are no adjustments for my extra bedroom, extra laundry room, upgraded closets, no adjustments for 12ft by 14ft patio, no adjustments for the top floor (two of 3 comparables are on the 1st floor).
        I flipped and started a dispute today. The officer tried to convince me that it’s a very lengthy process with a bad outcome for me and my rate lock. I asked for a paper support of his words and viola!, his manager is going to look at it tonight instead of in 2 weeks.

        • Hi Giselle. I hope it works out in the end. It’s surprising to hear of a lack of adjustments. It’ll be interesting to see how the appraiser responds (if you do actually hear back). Good for you to press through the loan officer’s discouragement of going through the process. If you feel money is on the table, you should do all you can. Are there other sales to support a higher value though? That will be critical.

  2. 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 J Bell. You’re probably not alone either. That’s the tricky part. It really depends on the lender and appraiser involved. As an appraiser, if I made a mistake or somehow misinterpreted the market, it is my duty to go back and change the report to be accurate and consistent with the best available information and trends.

      I have seen some investor clients have success with their rebuttals, but at the same time some appraisers are unwilling to really consider new information that may be accurate. That’s unfortunate when that happens – especially if there is a blatant misunderstanding of the market.

      One thing that nearly all appraisers will change though if need be is a clerical error or error in measuring that impacted value. An investor client recently had this happen because the appraiser measured the house as 150-200 square feet smaller than it was. This investor had me review the appraisal for him, and that was one of the glaring issues since Tax Records showed a larger GLA. I thought there may have been other reasons why the value should be slightly higher, but I told the investor it was VERY likely there would be an adjustment upward by $5,000 due to a square footage error. That’s what happened.

      • Great post Ryan – I think you’re right on this. I just challenged an appraisal this past month and we were able to come up with substantial evidence that bumped up the value by $500,000. It’s definitely possible, but it probably depends on the willingness of the appraiser to consider new information (and more importantly, that new information has to be pretty legitimate in the first place).

        • Thanks for your story Seth. Did you mean bumped up value “to” $500,000 or “by” $500,000? I think you’re right that success is truly circumstantial – and that it has to be legit.

  3. 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.

    • Great commentary, Paul. Thank you so much. You made some excellent points that everyone ought to read. I agree completely. This underscores the point to not try to appeal an appraised value when it is legit and there is nothing to appeal.

    • Case in point. Move on, you are better off than trying to fight a fight you will not likely win. The next appraisal could very well meet your expectations. This has been my experience.

  4. 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.

    • Amy, I’m sorry to hear that. I appreciate you sharing your story. A “flip” shouldn’t be penalized just because it is being sold to make a profit after being rehabbed. The big issue the appraiser needs to entertain is whether the house has been updated with quality material and workmanship. There is a bit of a stigma in the market sometimes for flips because of some bad apples not doing a good job, cutting corners and putting lipstick on the pig so to speak. A value should not be “cut” because a property is a flip. At the same time appraisers need to really look closely at flips to ensure the investor has done a decent job. There is definitely a spectrum of quality when it comes to flips in my market. Some investors do a great job while others sincerely don’t. The ones who don’t end up selling their homes for less because the market recognizes shoddy work in most cases. Good luck on your current deals. I hope you’re getting top dollar for top quality.

  5. 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.

    • Well said AI. I’m glad you pitched in some really good thoughts. I think you’re right about most “challenges” in that the lender provides a list of 10 sales and says, “why didn’t you use these?” I had this happen last week actually. As you said, it’s much better to include details and reasoning instead of “sales” that are most of the time not competitive at all. Excellent point on providing information to the appraiser at the first opportunity possible (instead of waiting until after the appraisal is done).

  6. 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?

    • Thanks Ray. Appraisers are licensed to appraise anywhere in the entire state, so technically they can come from anywhere in the state. I do know appraisers who travel quite far since they are located in rural areas, so it’s possible to be competent. I just wanted to throw that out there for the sake of conversation. Ultimately you and I know it’s not a best practice or good scenario in many cases like this if the appraiser really doesn’t know the market.

      If I were you, I think I would feel similar. I might suggest selecting properties you think are competitive and make notes on each property on what is similar and not similar. Also, print out a map of the area. Draw the neighborhood boundaries on the map as well as any other boundaries of nearby neighborhoods that are competitive or not competitive. Label them as such. If you know something changes in a nearby neighborhood (that impacts value) such as school district, draw that on the map too. This might help the appraiser understand how you see the market. I would recommend having a conversation with the appraiser on the neighborhood boundaries. Just be politely honest and say something like, “I noticed you were coming from out of the area, so I wasn’t sure how much you knew the market. I drew up a map that helped me market this property, so I hoped to share it with you. Can we chat for a sec?” Or however you want to say it.

      Keep us posted how it goes.

      • Thanks for the reply. I may just be paranoid. I’m assuming they’re competent and capable… For all I know, they could be in the area all of the time. Thanks again for the tips and advice. I appreciate it.

  7. 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… 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.

    • Wow Darrell, that was quite a response. Thank you for the commentary. I appreciate your experience too wearing so many different hats in real estate. I see you are still in SF too.

      You hit on some excellent points. I agree with you about the range of values. In fact, it would be great to be able to reconcile value in loan appraisals in such a way to say “Value looks good between $270-280K”. The diversity of sales does provide a range of values in most cases, though since the appraiser needs to select one point of value, there should be a good reason why value is reconciled to say $270K or $280K or whatever. It should be supported and the story the appraisal tells should make sense to the reader – and draw the reader to understand the conclusion.

      Thanks for sharing. I guess I should take off my sunglasses during inspections…. 🙂 (kidding).

  8. Patrick Olguin on

    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.”

    • I’m sorry to hear about your situation, Patrick. The question at the beginning sounds like a red flag to me if it was sarcastic. I think an appraiser asking that question without a sarcastic tone gives the agent space and opportunity to provide support. Did your agent share any support to substantiate the price? Hopefully so. The buyer realistically may need to go with a different lender and then ask the lender to only send an appraiser familiar with your niche area. Best wishes.

    • Valerie Treece on

      We are dealing with this right now in Houston, TX. I am the listing agent on a beautifully remodeled property. I received several offers in the first few days on the market; accepted one $5K over asking price. After we contracted, I received a cash offer. The appraiser came in $30,000 under the contracted price. I found this out Friday afternoon. The buyer’s really really want this house as there is nothing like it on the market. The buyer’s agent and I have submitted information to the bank and for the appraiser. Through logic and research, I pray that we are able to sway him. If not, these people are going to lose out on a great home!

  9. 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?


    • Hi Eric. It sounds like the appraiser gave a negative time adjustment. Is that correct? The adjustment was because of flooding I assume. The proof that your market would be increasing can be found with sales in your immediate neighborhood. Did the appraiser use comps from the area that is not located in a flood zone? Do these comps suggest an increasing market or a big value difference between the flooded area? If the appraiser used only sales in the flood zone, then provide some sales outside of the flood zone (in your immediate neighborhood or in a nearby competitive neighborhood) to help build your case. The difficulty is that if there are no recent sales (as you mention), it may be hard to prove that values in your neighborhood have not been impacted by flooding that occurred nearby. Are any active listings or pendings in you neighborhood priced higher than the flooded area?

  10. 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….

    • Sorry to hear about that, Ron. Each lender usually has an appeals process, though I’m guessing you tried that and the appraiser wouldn’t budge. Old comps can make an enormous difference – especially when the market is changing quickly. Thanks for sharing your story.

  11. 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.

    • Thanks for the comment Rob. If you are right that value is really much higher than the recent appraisals, there has to be a way to support the higher value. Are there any other competitive neighborhoods in your city or in neighboring communities? There has to be something comparable out there for an appraiser to use. After all, when your home and others on your street first sold and there were no other houses on 2+ acres on your street, appraisers had to use competitive sales somewhere for that time (unless all buyers paid cash). Appraisers do not have to use sales in the immediate neighborhood. If there are none, then appraisers need to find sales elsewhere. It’s obviously ideal if there are nearby sales, but that is not always the case. I would also be interested to see what type of a percentage difference there has been historically between typical subdivision houses and your community. I wonder if that percentage has kept pace in recent years (and what subdivision houses are selling for right now – This could help provide some context). This may not be relevant at all to your situation, but the market in some areas experienced a very significant decline after 2006, so I wonder if some owners are in touch with that. On that note it would be interesting to see which houses have tried to sell, and then talk to all agents involved as to why they did not close. If it is indeed because of bad appraisals, that is tragic. But I wonder if there are other reasons. You may consider finding a very experienced appraiser in your area and talking things over with the appraiser. Feel free to comment back. Thanks Rob.

  12. 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?

    • Hi Joyce. Thank you for the comment. I’m so sorry for your situation. What was the condition like on the other units? Did they have any premium upgrades too? There is always a reason why a smaller unit can sell for more than a larger unit if there is a big difference with the inside. Do the larger units tend to sell for more usually? That is often the case in townhouse developments, but I wanted to ask since sometimes the market favors one unit over another for some reason.

      • Hi Ryan,
        So kind of you to reply. Yes – the larger end units always sell for more. When the units were new in 2002, the average price difference was 30-40k. As for premium upgrades, I honestly don’t know about the comp because I haven’t seen the report yet. I am basing my information on what my broker told me. My broker called his rep at the lender today, and was told that the appraisal would be questioned. At least it’s a start. Thank you so much.

        • No problem at all. It’ll be interesting to see how it all shakes out. I would be curious to see what other model match listings are listed for right now in your neighobrhood. It’s a wonder why the value would be reconciled 5K lower if things like condition, view and upgrades are all similar – and of course if there is a hefty premium for your unit. There are always so many factors to consider, which always makes it interesting. Hopefully your agent will be able to put together a strong rebuttal. Feel free to share the document in this post too if it’s useful for you. Best wishes.

  13. 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.

    • Hi Jacob. Thanks for the comment. Was this appraisal you described above done from the bank you are getting a loan with? Or was it a private appraisal you hired to get a sense of the market? You are describing the cost approach to value where the appraiser considers the cost to build as well as the value of the land. The other main approach that is commonly used is called the sales comparison approach. Instead of land value and the cost to build, this approach considers recent sales instead (or “comps”). What was the value of the sales comparison approach in the appraisal? That is probably going to carry more weight than anything with a lender.

  14. 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,

    • The numbers weren’t confusing at all. I was just wondering how the cost approach and sales comparison approach lined up. I would be curious to hear what the credit union thinks of the appraisal. It sounds like you have some good questions for the appraiser to answer such as: Why were no 4-bedroom comps used? If no adjustment was given for the basement on one comparable, why? If a contractor and other sources are saying the house would cost more to build, why is the appraiser’s source of building data so different? If you have different and more relevant sales to provide to the appraiser, that would be a best case scenario along with maybe asking a few questions or pointing out certain things that puzzle you about the appraisal report.

  15. 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.

    • Hi Kelvin. You can contact the Bureau of Real Estate Appraisers in CA at to speak with someone. Were these comps you mention sold on MLS? Were they similar to your house? If there were no recent sales over the past few months, has the market changed to the point where listings are now priced lower than those higher sales? Many markets tend to cool off during colder months. These are key questions. A property can sell 70K higher very easily if it had a premium location or premium upgrades or sold at a better time in the market. It does of course sound puzzling why the appraiser would not use older sales in your subdivision and then find some newer ones elsewhere to meet the lender’s requirement to use sales within 90 days (if that’s what they had). But the answer to these questions is of course of equal importance. Feel free to comment back if you’d like.

  16. 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.

    • Hi Josh. Great question. Did the comps in the neighborhood sell on MLS? If so, they are something the appraiser could easily and readily consider. If not, it can be challenging for the appraiser to really verify the sales and understand the nature of the transaction. For instance, a private sale could theoretically have included a Ferrari in the garage to help boost the sales price. Anyway, I recommend using competitive sales in the immediate neighborhood if there are some available (this means similar-sized homes), but also feel free to use some that are a bit further away too. The key is that all sales are truly competitive and come from similar neighborhoods. Would a buyer consider purchasing all of these “comps” if your home was not available? That’s what makes a good comp. A “comp” should be a substitute for the subject property. Sometimes when using sales that are too far away or even one street away, the different tract or street might actually have higher or lower values for some reason. If there are only sales in your neighborhood that are smaller, you might find an older sale in your neighborhood that is larger to help show that value is indeed possible at higher levels (if it is) and use other nearby sales that are similar in size too. You don’t need to provide 10 sales, but try to narrow it down to 3-5 at most. Is your lender asking you to do this all by yourself or is the loan officer assisting you at all?

  17. 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!

    • The private sale can reinforce value. The most important thing is that the nature of the transaction can be verified. The appraiser (and you) would need to know the details. Appraisers should stick to MLS sales if they are ample though rather than use one Lone Ranger high sale (there should be a very good reason why a private sale is used if it was indeed the highest sale in the area – way above MLS sales). Unless you have details for the private sale, I suggest not using it. It is best to show comps that are the same design, though if the appraiser didn’t seem to distinguish between one and two-story properties in the report, it would seem fitting for you to share whatever you want. However, in real estate it’s always best to compare apples to apples so to speak.

  18. 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:


    * 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.



    *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.



    *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.

  19. 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.

    • Krista, the market could have changed of course in this time period, but that seems really doubtful. Even if values cooled off or changed somehow, it is shocking that these adjustments were not given before and now they have been given. Appraisers have to disclose in the report when they’ve appraised a particular property before. If this guy is paying attention (and actually doing the appraisals himself), this disclosure should have been made. I would think if he was aware, he would have been far more attentive to adjustments that were made or not beforehand.

      My questions to you:
      1) Have you reached out to the appraiser?
      2) What sort of explanation have you received from the appraiser about the discrepency between both reports?
      3) Are you positive it was the same appraiser who inspected the property each time? I know it was the same appraiser who signed the report, but did this appraiser actually do the appraisal?
      4) Are there other sales to substantiate a higher appraised value?

      • Ryan,

        It is the same appraiser. He did disclose that he had done the appraisal in December, however I don’t think he thought we would have the actual appraisal on hand. This is a Colorado market, it is very stable.

        We did not speak with the appraiser initially, we went through the lender. The lender has a chief appraiser, that looks over the appraisal and decides to forward it on the the appraiser for review/inclusion. The chief appraiser, even after viewing both appraisals doesn’t feel it warrants a 2nd appraisal.

        The comps are not the issue, they are all over $300k, except one which is $257k (it only sits on 1.5 acres while we have 48 acres). Our contract price is $310k.

        What is hurting us is:
        1. The large adjustment difference in the same exact properties
        2. The condition when this property was a foreclosure, had $30,000 estimate damages in plumbing, missing carpet, old tile, broken windows it was C4. On the new appraisal after the plumbing was repaired and $25,000 in cosmetic work was done condition in still C4.
        3. The comp that has 1.5 acres only received $36,000 adjustment for the acreage, when this area is $1800 an acre. We received the $1800 adjustment on every other comp. The comps is less than a mile from our house.

        If our adjustments were the same as the old appraisal and given C3 condition we would be at contract price.

        We just found out today it will not be moving forward, we did not receive an explanation, although we will be asking for it.

        There are only two appraisers in that area, even if we get a second appraisal I am not sure we will be able to get a fair one.

        • Wow, what a crazy situation. I think you’re right that the appraiser probably thought you didn’t have the original appraisal. Adjustments in appraisal reports are supposed to be market-derived. In other words, how much would a typical buyer in the market pay for the different feature? That’s what the adjustment should be based on. So a basement is adjusted for what the market is willing to pay for the basement, and additional acreage is adjusted accordingly also. It’s very suspect that adjustments were significantly different, and that doesn’t look good for the appraiser at all. I am guessing you didn’t get any explanation from the original appraiser either. The key in your situation is going to be having sales and/or listings to help support your value. If the market is willing to pay those higher levels, there has to be support for that price either through a sales price or reasonable adjustments. Was the original appraised value legit? That’s another question.

  20. 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?

    • Hi Liz. Thanks for checking in. On one hand it’s so hard to say whether you should contest the value or not because I don’t know your market, and I don’t know if the previous appraisal was legit or not. I do know that a property like yours should be compared to other similar properties. If the comps were not on acreage, that sounds a bit strange. If you know of other better sales, it sounds like it would be a great idea to have your lender share those with the appraiser (include them with the format I explained in this post or a format the lender has). Remember it can be hit and miss when challenging an appraised value depending on the situation, the appraiser, and the lender. Ultimately out of principle and in light of paying $500 out of pocket, why not go for it? I would.

  21. 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…

      • Ryan,
        I could use your advice. I recently sent an email to an appraiser asking him to reconsider the value he placed on my home. I listed specific things that differentiated my home from the comps. The appraiser wrote me back and said his initial value stands and that the bank specifically asked him not to discuss the appraisal with me. This seems sketchy to me. I have the facts to back up my request but he refuses to look at them. I don’t need it to appraise higher but It is defiantly not an accurate representation of my home. What can I do from here? Based on principle I feel I need to elevate this as the next person may need it to be accurate. Your advise is greatly appreciated.
        Thank you

        • Hi Darren. Thanks for reaching out. In this case the best course of action is to ask the bank what the proper procedure is for a reconsideration of value. Then follow the bank’s procedure instead of contacting the appraiser directly. My guess is the bank has a form you can fill out or at least data you can provide them along with their form or whatever mechanism they might have. When you jump through the bank’s hoops though, they can in turn provide that information to the appraiser. I understand it sounding sketchy for the appraiser to say he cannot talk to you about the value, but it’s actually the truth. Why? Because the appraiser was hired by the bank to do an appraisal on your home. The bank is the appraiser’s client, so talking with another party (even the home owner) about the value would violate client confidentiality. I know that’s not an easy pill to swallow, but it’s the truth because the appraisal is not for the home owner, but for the bank. An appraisal is a tool for the bank to assess risk. Should they do the loan or not? Granted, the home owner will clearly be impacted by the bank’s decision, but fundamentally the appraisal still belongs to the bank because the bank is the one who established a client relationship with the appraiser. With that being said, it sounds like you’ve thought through issues, and hopefully you have some good points and/or data for the appraiser to consider (I might recommend 1-2 different comps too if you have them). Sending the information through the proper channels is probably your best bet, though if the appraiser said “the value stands” already, it’s a wonder how any new data will be received. I hope the best for you. If you have any other questions, feel free to ask.

  22. 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.

  23. 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.

  24. 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!

  25. 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 Jesse. That’s not an easy situation to be in. I’m sorry to hear about it. I get you feeling nervous, and that is normal. It’s almost always nerve-wracking to buy a house, and it’s especially true when there are appraisal issues. Since FHA requires two appraisals on a flip for the time being, it often puts Borrowers in this position where we are really splitting hairs about value. Realistically there is always a range of value in real estate. What I mean is we wouldn’t look at a property and say, “It is worth exactly $133,456.87.” We might instead look at it and say there is a reasonable range of what buyers are willing to pay (maybe $130,000 to $135,000 as an example). I understand lenders requiring two appraisals because they are the ones lending the money, yet when we throw two value opinions into the mix, it is also plausible that they both fall within a reasonable range of value, and a lender has to make a judgment call as to where the market is at. Unfortunately the lender will go with the lower one in most cases. I know that doesn’t help you exactly to mention, but what you are experiencing in part is due to the difficulty and byproduct of requiring two appraisals and maybe also lenders not weighing the range of value in real estate. I do hope somehow you are able to work it out. If the appraiser was too conservative, maybe there is room to reconcile the value higher. However, we also have to ask if the other appraiser was too aggressive at $135,000. After all, if the house was worth $140,000 in the beginning, the seller may have listed it at that level, no? Thus value really might be lower. The proof is in the comps though, and for your sake I hope it is there. If the lower appraiser won’t come up, maybe the seller can budge or work something out somehow. Or maybe you can get down-payment assistance to help cover some of the expenses you are asking the seller to handle. Ask your loan officer if there is any possible assistance for you out there to help you tackle some of the costs instead of asking the seller to cover all of them. If your loan officer comes up blank, go to Google to see if you can find anything. That may help sweeten your deal. Best wishes. Hang in there.

  26. Lacher Watson on

    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.

    • Ryan Lundquist

      Hi Lacher. The key question to ask is where the current market is at right now. Just because you bought something at one price in years past does not mean it is worth that or more now (I know you know that). What are similar properties selling for in the neighborhood right now? If it is a custom home, I would ask what other custom homes have sold for recently in the surrounding competitive market area? Be careful to not compare your home to ones that are literally brand new right now though since buyers often pay a premium for a new home (just like they do for a new car). If your lender thinks you should challenge the appraised value, does your lender have better data? That’s the key.

  27. Angela Wilmers on

    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?

    • Hi Angela. If the market has increased since 2011, it’s a wonder why the value would be lower today unless the value was simply not correct in 2011. In terms of value, the proof is in the market. Are there similar sales and similar listings that support a much higher value than $395,000? If so, I might recommend asking your loan officer what the process is like to contest the value and then putting together some thoughts to have the appraiser consider. If for some reason sales are coming in lower though and there isn’t any data to support a higher value, then there isn’t much to argue. With that being said, if you got the mortgage, this may be water under the bridge. If it was a botched appraisal but the deal still worked (and you didn’t lose money), then it might be best to simply let it be.

  28. Christopher H.

    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!

    • Thanks for checking back in Christopher. I’m so glad to hear things went well. I’m glad the appraiser was willing to make a change. It could have been a clerical error to indicate there were less than two bathrooms. Whatever the case, I’m glad it was fixed. Best wishes.

  29. 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.

    • I wish you the best Jonathan. I think the way you feel is spot on because it’s not realistic to be overly optimistic during this process. If the appraiser did miss something in your case, I hope the appraiser will take an honest look at the data and consider anything that was missed. Hopefully the “comps” your agent pulled really are competitive. Sometimes agents share solid sales that really are comparable, but other times they are just sales (meaning they don’t really compete with the subject property). I hope all goes well with you. Best wishes.

  30. 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 Justin. Thanks for reaching out. Sorry for the slight delay as I’ve been out of town. I have heard of adjustments like that, though it’s impossible to say whether they are legit or not in your case. Sometimes adjustments are very minor because there is little difference when comparing older homes verses newer homes (there is usually somewhat of a premium though for newer homes (but it really does depend on the location, quality, etc…). The key here is that any adjustments actually reflect the market. In other words, does the dollar amount represent the way buyers behave? In an ideal word an appraiser would use some sales that are similar enough that they don’t actually need adjustments. When appraisers use very similar homes it really helps show what the home is worth – as opposed to using “comps” that need big adjustments. Hopefully the appraiser had 1 or 2 newer sales in the report and/or something with a large basement too. This would justify value. If the appraiser only had 20-year old sales and did not somehow account for any age difference, that could be a big issue.

      Regarding your value, the key is what the current market is doing. There are areas in the United States that have seen massive appreciation since 4 years ago (like my market in Sacramento), though there are places that have definitely not seen that same trend. Keep in mind four years ago you may have paid a premium for the property being brand new, and now it’s not brand new. Thus the market right now probably isn’t willing to pay the same difference between older homes verses something newer. I’m not saying there is no value premium for the age difference any longer, but only that a 4-year old home does not tend to carry the same weight as a brand new home (like a brand new car vs a 4-year old car). I don’t say this to build the appraiser’s case here, but only to highlight the most critical issue. Are there similar sales that justify your home being worth enough to remove PMI?

      I think it’s good for you to ask for an explanation. If you hired the appraiser directly, ask the appraiser for a response via email. If the lender hired the appraiser, make sure to communicate to the lender (who will in turn communicate to the appraiser). Before bringing in a heavy hand with the Office of Real Estate Appraisers (or whatever it is called in your state), I would consider reaching out to the appraiser multiple times.

  31. Mike Penfound on

    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 Mike. Thanks for the comment. It’s always hard to give value advice without knowing more details. I’ll pitch in a few thoughts though. I think it would definitely be prudent to ask the appraiser how the studio / workshop fits into the appraised value. Keep in mind an appraiser might have considered the area without giving a specific adjustment for it though. We live in a world where we want to see very specific adjustments all the time. Just this week Zillow came out with an article stating the color blue in the bathroom gives an extra $5400 in value (total baloney). Anyway, adjustments can happen if they need to, but it is also possible for the appraiser to consider the value of the extra space in the final number selected too instead of making a specific line-item adjustment. I just wanted to give you a heads-up on that.

      Anyway, if this area was permitted, it’s hard to imagine it doesn’t carry some weight in the market, but I’m not in your market, so I don’t really know. Nonetheless, I would go through the lender’s channels and ask the appraiser to explain how the 1200 sq ft studio was considered in the value. If it was not considered, I would ask that the appraiser would consider what the market was willing to pay for such a feature. Provide cost figures to the appraiser, signed permits, etc… so the appraiser has all the details. Realize of course the market is probably not willing to pay anywhere close to what a 1200 sq ft unit might cost to build. For instance, I have something on my desk right now where the owner spent $130K on an accessory dwelling. I don’t know what the final number is going to be, but contributory value is nowhere close to that figure. I would think the lender would want the appraiser to reconsider value in this situation if the unit was not considered. In an ideal world the appraiser will be able to find comps with something similar. Thus the proof of value would be found in the market. If you have examples of sales with similar units, that would be ideal so the appraiser can look into those too and consider them.

      I hope that helps.

  32. Rachel Richards on

    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.

    • Rachel Richards on

      I also forgot to include that the appraiser didnt even spell my husbands first name correctly, he put “CHAR” instead of Chad. Which that just shows me how sloppy of a job this was. We are also questioning the square footage measurements. The appraiser wrote that it was almost 100 sq ft smaller. I’m willing to go to the house and measure and calculate it my self but was wondering if that would stand as proof for an inaccurate appraisal.

    • Hi Rachel. Thanks for reaching out. It’s hard to speak into your situation without knowing the particulars. Are you in contract somewhere around $170K? Or are you in contract around $135K and you were just surprised it came in at that level? Maybe you could clarify for the sake of discussion.

      Regarding tax assessments, some areas of the country have better assessments than others, so it’s hard to say what it is like in your area. In California I would never rely on the assessed value because of how things work here in California (namely Proposition 13). Generally I advise owners not to give too much weight to tax assessments no matter what the state, but I suppose sometimes it is more accurate in some areas. Just keep in mind the Assessor has not gone inside most likely, and the goal is to generate a value for tax purposes rather than market value for selling purposes. It is a different ballgame.

      Square footage can matter, so if the appraiser is off, that could change the value. Just make sure you know what you are doing when it comes to measuring though. I say that with all due respect, but I find many people (even real estate professionals) do not know how to measure a house.

      • We are in contract for 130k. the house is a govt. owned foreclosure. The house previously sold in 2012 for $183k, and then sold again in 2014 for $171k before it foreclosed in 2017. So im assuming that it had to be appraised at least for $171k in 2014 in order for them to get that loan at that amount. In 2014 when it appraised for 171k most of the house had not been remodeled. It is now remodeled and appraised for 40k less, plus the housing market in this area has increased greatly since 2014. So its just not a logical appraisal to myself or the bank.

        • Thanks for the context Rachel. I appreciate it. This could be an appraiser “playing it safe” as you said. That happens at times. It shouldn’t, but it does. Yet it is surprising to hear the property is being marketed at such a drastically lower level than it is worth, so part of me wonders if there is some legitimacy for a lower value. Keep in mind sometimes owners and agents don’t always have the right perspective on value either. Or maybe the truth is in the middle. I would probably be concerned too if I was in your shoes – especially if the property sold for $171,000 in a previous market that was lower. Yet let’s also remember sometimes properties sell for too much. I just appraised a house, for instance, that is now actually worth what someone paid for it two years ago (they had an FHA loan and everything).

          If you know the market is higher, then you’ll just have to live with a lower appraisal right now and simply move on. You may be asking for problems to go get another appraisal with another lender anyway if this deal is ready to close. Keep in mind the FHA appraisal sticks with the property for 4 months now I believe, so any other lender is going to be seeing this FHA appraisal from the get-go.

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