Posted almost 8 years ago

How to appeal a low appraisal (and win!)

I've been on this site for a while and don't post as much as I would like but I have appreciated the mountain of information found on here. I intentionally waited until I closed on the loan (which happened earlier today) until I posted this. I'll try to keep this intro brief as the post will be pretty lengthy. In short, I did a refinance and the new loan includes funds for the renovation work I am doing. With this type of loan the bank will base the loan amount on the ARV. I am a pretty conservative person when it comes to my investing. I don't put my rose-colored goggles on when doing projections. The appraiser valued the home ARV at $240K which was well below even my own conservative figure of about $250K. I called my loan person and he said if I felt it was too low i should write a letter to dispute it. I did my search on here of course as well as google searches on appealing an appraisal and the magorily of what I found said that the only way to have a fighting chance is for there to be recent sales that the appraiser did not take into consideration. That was not an option for me so I basically had to breakdown every comp he used. I have copied and pasted below the exact letter I sent to the bank. The only edit I have done is remove the addresses and links.

Dear Sir/Madam,

I am writing this letter to appeal the appraisal I received which I do not believe fairly reflects the true ARV of the property. One of the items that is not reflected in the appraisal is the fact that the property is in a historic district. I believe this historic designation adds value to the property.

I have gone more in-depth on why I believe there are faults in the comps used below:

Comp #1 - (Address insert)

  • This house is comparable in size but the location is significantly inferior to the location of the subject property. This comp is much farther away from the main university. The subject property has a heavy concentration of students and student rental activity.
  • This property is listed on the Tax assessor’s website as “Apt.Boarding home”, which I think reduces the value of this property as well.

    Comp #2 - (Address insert)

  • They are similar in location but the subject property is over 30% larger than this comp. This appraisal is suggesting that these two properties are worth the exact amount, even with such a large difference in size.
  • The subject property will include an extra bedroom, laundry room and has a larger basement sq footage.

    Comp #3 - (Address insert)

  • This property went into contract and closed two weeks after it was listed on the MLS. I believe this reflects a low listing price/distressed seller who needed to move the property immediately.

    Comp #4 - (Address insert)

  • This comp sold two times in a span of 4 months. This appears to be a flip and was just sold for a quick profit. After it was sold the 1st time it was re-listed 2 1/2 months later and then sold a little more than a month after.
  • The location of this comp is similar to the subject property but it is much smaller in size.

    Comp #5 - (address insert) #6 - (address insert)

  • These two properties are currently active listings and I believe the estimations given to the subject property in relation to these are in line with the ARV.

Below I have listed other nearby comps that I believe also support that the subject property has a higher ARV than suggested in the appraisal.

(Address insert)

  • This property was sold on 7/16/14 for $244,000
  • Home is 6 bedroom, 2 bath, 1144 interior sq ft, 996 sq ft lot size.
  • This home is more than 1000 sq ft smaller than the subject property
  • The listing notes there was a “motivated seller”. Suggesting they were looking to move the property very quickly
  • Here is a link to the listing: (link insert)

    (Address insert)

  • This property was sold on 4/29/14 for $235,000
  • Home is 6 bedroom, 3 bath, 1530 interior sq ft, 1107 sq ft lot size.
  • This home is more than 1000 sq ft smaller than the subject property
  • They are in a similar location
  • Here is a link to the listing: (link insert)
  • (Address insert) (active listing)
  • This property is currently listed at $325,000
  • Home is 6 bedroom, 2 bath, 1800 interior sq ft, 980 sq ft lot size.
  • This home is almost 1000 sq ft smaller than the subject property
  • They are in a similar location
  • Here is a link to the listing: (link insert)
  • (Address insert) (active listing)
  • This property is currently listed at $395,000
  • Home is 6 bedroom, 1 bath, (listing description states 5 bedroom, 2 baths), 1895 interior sq ft, 1102 sq ft lot size.
  • This home is almost 1000 sq ft smaller than the subject property
  • This comp is slightly closer to the main university in the area
  • Here is a link to the listing: (link insert)

Thank you for taking the time to review this and I hope you find that the information I have provided does in fact support a higher valuation for the home.

Warm Regards,

Damian Baynes

In the end it took me just under two hours to compile all of the information I used and to type the letter to the bank. They did ask me for proof that the home is in a historic district which I provided them. A few weeks later they scheduled a second appraisal and the second appraisal came back at $264K! This $24K difference was literally the difference in me getting this loan and not getting it. I know it's a long read but hopefully it will help others who ever get in a similar position.

Comments (8)

  1. Great article Damian. You just taught me a few things. Thanks for sharing!

    1. Thanks Andrew! Glad you got some info out of it.

  2. Thanks a lot for sharing Damian. I am currently refinancing (cash out ) an investment property with 2 homes on the same lot which was originally appraised by the bank for $30k less than my own appraiser. It worked to my favor as we got the seller to lower the contract price by 12.5k.

    Your article gives me hope and courage to challenge the bank's appraiser this time around if I believe the appraisal is too low.

    Thanks again Damian.

    1. That's great new David! Hopefully you can get those appraisals to work for you on both ends of the deal. The good thing about appealing an appraisal is it doesn't cost you anything to do financially. I will admit, you will lose some time but if the appeal goes in your favor it should make up for the time lost.

  3. Excellent article, Damian!  Thank you for sharing.  I formerly did appraisals on large commercial projects ($50 - $100 MM) and in that process realized that appraisals are inherently subjective and based on a multitude of assumptions.  If one can provide objective & credible information to an appraiser that he/she may have missed, then good appraisers will often consider it.  One of the properties I just purchased (all-cash) is also in a historic district, and I assume that when the time comes to do an appraisal for a cash-out refi, the appraiser will use comps from outside that historic district, and I will need to write a letter similar to yours.

    1. Thanks Matthew! It is very subjective indeed. It's still amazing how the appraisal can vary so widely from one appraiser to another. I'm certain when you go for that refi they will overlook the fact that it is in a historic area. That's just more ammo for you to fire with.

  4. Damian I applaud you for taking a potential setback standing up and reversing the outcome. You seem determined & astute, now what weapon could defeat those qualities?


    1) this was your personal right? 

    2) did you "walk through" the comps to get the minute details or did you find online/over the phone?

    1. Thanks for the compliment Brandon! To answer your question:

      1) This was an investment property

      2) I did all of my research on these online. I looked up the property assessors site to get property information to see the official property description according to the city and also the zoning. That helped with the first property I listed in the letter that was listed as "apt/boarding home". I also used Redfin for a great deal of info. Luckily they service this city and I was able to just type in the addresses and see the old listings, agent comments, sale dates, etc. If redfin is not an option you could always try just to google the address you need more info on and see if any of the other links can provide the same info. You probably should be able to get this info from a real estate agent as they have access to the MLS also.