Lender's appraisal- can we challenge it?

Question

We just received lender's appraisal on the property we area selling. While the market is very hot in our area and houses are moving quickly, I am puzzled why comparable houses (number of bedrooms, bathrooms, total sq. ft) that sold within the last 2-3 weeks were not included in the report, while those that sold almost a year ago are included. Has anyone challenged appraisal, on what basis and was it successful?

Grateful for any insight you may provide!

Kirk R. · Answer

i have tried to meet with appraisers whenever possible BEFORE their report.

My experience is once they publish/deliver they don't like changing.  I did convince one when I was Realtor but it was small bump maybe $4k.

argued with one appraiser.  he Used houses in different school districts.  imo school district one of largest factors in my market.  Came back with low appraisal.  No changing his mind.  ok fought & lowered tax value with that appraisal! lol

Paul Rush · Answer

In business you don't get what you deserve, you get what you negotiate. Definitely challenge it!

Jed Haslam-Walker · Answer

@Svetlana G. Hi Svetlana,

There are rules governing the methods used to determine what is called in Appraiser land FMV - Fair Market Value.

Appraisers have to follow the procedures in their manual USPAP (Uniform Standards of Professional Appraisal Practices)

normally this leads to FMV being determined on appraisals of property sold in the past 6 months. However, states can sometimes have differing rules on how to define FMV according to the situation, for example if an appraisal is being carried out for the purposes of determining FMV on an estate sale or a divorce sale then the state has to follow statute or precedent specific law for that state - however in a straightforward residential sale it normally is 6 months, If you wish to challenge the appraisal I would suggest you contact the ISA - International Society of Appraisers - https://www.isa-appraisers.org/about

They will be able to help you.

Hope this helps.

Lydia S. · Answer

@Svetlana G. It sounds like  you’re willing to give up that 3% seller credit but the buyer needs that, so keep the 3% credit intact and reduce the purchase price by 3% instead- you will essentially net the same amount.  Does this take you to the appraisal amount?

Have your realtor run some calculations to show you, but hopefully challenging the appraisal works out for you.

Russell Brazil · Answer

I challenge appraisals all the time successfully

Michael Marchman · Answer

I tried once and the time and effort was not worth the results

Jonathan Greene · Answer

You are entitled to object to the appraisal and provide only comps to justify your objection. You do not go directly to the appraiser, you address it through the lender to the company. The lender can only provide comparable sales that back up what you are saying. Appraisers are not even allowed to use one-year-old comps so that part doesn't make much sense. Have your realtor pull the relevant comps, forward them to the the lender and ask them to submit them. You also have to suss out if the buyer wants the appraisal to come in low so they can renegotiate because the objection has to go through their lender since they did the appraisal.

Svetlana G. · Answer

We do have an appraisal contingency.  The net price was very close to the appraisal after they asked us for 3% back. Originally, our realtor told us that if the appraisal comes low we can always adjust the amount that we are giving back to the buyer. If we were to remove the 3% back and settle on the appraisal amount, we would still be fine. However we are learning just now that they cannot purchase the house without that 3% buyers subsidy. Beyond frustrating.

Brian Briscoe · Answer

@Svetlana G.

What does your contract say?  Is there a contingency for appraisal? If not, one option is to tell the buyer to take it or leave it. They thought it was a fair price when they made the offer.  If you have wiggle room and the appraisal wasn’t too far off, you can also choose to negotiate instead of hitting the restart button if the buyer walks away.

Kelly N. · Answer

We went through this as a buyer a few years back, and ended up going to a new lender and paying for a new appraisal to get the deal to go through.  We challenged the first appraisal, but they are pretty much untouchable, the lender can't even dictate who is used to keep things "fair".

Good luck to you.

Lender's appraisal- can we challenge it?

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