A low home appraisal can throw a wrench into even the smoothest real estate deal. Whether you’re trying to sell your home, refinance your mortgage, or close on a purchase, the appraised value has the power to make or break the transaction. And when that number comes in lower than expected, it can feel frustrating and confusing, especially if market conditions or buyer interest suggest otherwise.
Picture this: a homeowner accepts a strong offer after just a week on the market. The buyer is eager, financing is lined up, and everything is on track, until the appraisal comes in $25,000 below the agreed sale price. Now the buyer’s lender won’t approve the full loan amount, and both sides are left scrambling. This kind of situation happens more often than most people think, but there are ways to push back. If you believe your home’s value wasn’t assessed accurately, there’s a clear process to follow, and in many cases, it works.
Understanding the Home Appraisal Process
A home appraisal is a professional, unbiased estimate of a property’s fair market value. It’s typically conducted by a state-licensed or certified appraiser who evaluates the home’s condition, location, features, and comparable recent sales in the area. Most lenders require an appraisal before approving a mortgage to ensure they’re not lending more than the property is worth.
While the goal is objectivity, appraisals aren’t immune to errors or oversights. In fact, appraisals can sometimes come in lower than expected for reasons that have little to do with the actual quality or marketability of the home. Common causes include:
- Outdated or inaccurate property records
- Use of outdated or poorly matched comparable sales (known as “comps”)
- Rapid market changes not yet reflected in recent sales
- Lack of understanding of unique home features or upgrades
- Appraisers unfamiliar with the local market
Understanding how the appraiser reached their value is key to spotting mistakes and making a strong case to challenge a low home appraisal.
Step 1: Obtain and Review the Home Appraisal Report
The first step in challenging a low home appraisal is to carefully examine the original report. You’re entitled to a copy, so request one from your lender as soon as it’s available. Once you have it, go through the report line by line. Check for:
- Incorrect square footage or lot size
- An inaccurate number of bedrooms or bathrooms
- Missed upgrades like a new roof, HVAC system, or finished basement
- Outdated or poorly matched comparable sales (comps)
Even a small factual error, like the wrong number of bathrooms, can skew the appraised value. If you recently added a bathroom or remodeled your kitchen and it isn’t reflected in the report, make a note of it. Inaccurate property details and outdated comps are two of the most common reasons for flawed appraisals. Be sure to highlight anything that may have been overlooked or misrepresented.
Step 2: Gather Supporting Evidence
Once you’ve identified issues in the home appraisal report, your next move is to gather evidence that supports a higher valuation. This includes:
- Recent comps: Find at least three comparable properties that recently sold in your area, ideally within the past 90 days. They should be similar in size, age, condition, and location.
- Documentation of upgrades: Provide copies of receipts, contractor invoices, and permits for any recent improvements. Highlight projects that improve value, like kitchen remodels, bathroom additions, or energy-efficient installations.
- Visual proof: Include photos that showcase your home’s condition, curb appeal, and any features that stand out (e.g., a new deck, landscaping, or a finished attic).
Real estate experts emphasize the importance of providing clean, well-organized evidence. The goal is to help the appraiser or lender clearly see how the original valuation may have missed important value-adding elements.
Step 3: Submit a Reconsideration of Value (ROV)
With your evidence prepared, submit a Reconsideration of Value (ROV) request through your lender. This is your official opportunity to ask the appraiser or lender to review the report and revise the valuation. Your ROV should include:
- A short, respectful cover letter summarizing your concerns
- A list of specific errors or inconsistencies in the original home appraisal
- Clear documentation supporting a higher value, including your recent comps and home improvement records
Some lenders have standardized ROV forms, while others will accept a well-written email or letter. Stay professional and avoid emotional arguments. Remember, your goal is to show that the original home appraisal may not reflect fair market value based on real-world data. According to Fannie Mae, lenders are required to consider a borrower’s ROV request when presented with compelling evidence.
Step 4: Consider a Second Home Appraisal
If the ROV doesn’t lead to a revision, or if your lender refuses to adjust, you may request a second home appraisal. Here’s what to know:
- You’ll likely pay for the second appraisal out of pocket
- It must be conducted by a different appraiser, ideally one with local market experience
- Not all lenders will accept a new appraisal, particularly if they believe the original is sound
Still, a second opinion can be worthwhile if the original appraiser was unfamiliar with the area or overlooked key improvements. In competitive markets or areas with few comps, a fresh perspective can result in a more accurate valuation. Be sure to ask your lender in advance whether they’re open to reconsidering a second appraised value.
Step 5: Explore Alternative Solutions
If all else fails and the home appraisal value remains low, don’t panic. You still have options:
- Renegotiate the purchase price: In many cases, sellers will agree to a lower price that aligns with the appraised value, especially if they’re motivated to close.
- Cover the difference in cash: If you’re the buyer, consider increasing your down payment to cover the gap between the appraised value and the contract price.
- Reconsider the deal: If neither party is willing to budge, it may be best to walk away. Avoid overpaying for a home that could become difficult to resell or refinance in the future.
Talk with your real estate agent or mortgage advisor before making any decisions. A low home appraisal can be frustrating, but with expert advice and careful planning, you can still find a path forward that protects your financial interests.
Your Next Move: How to Respond to a Low Home Appraisal
Challenging a low home appraisal requires diligence, evidence, and effective communication. By understanding the appraisal process and following these steps, you can advocate for a fair assessment of your property’s value. If you’re facing a low appraisal, don’t hesitate to act and protect your investment.
Need assistance with a home appraisal dispute?
Contact our experienced team today to guide you through the process and ensure your property’s value is accurately represented.