5 common errors to look for in your appraisal report if it comes in low

why does appraisal value equal contract priceAppraisal Come In Low? A popular topic among users of appraisal services these days is low appraisals. As you know the real estate market has been depressed over the last several years and a result of this is that appraisals for refinancing and home purchase’s  have come in low. While foreclosures and the overall downturn in the market have been a major reason for this there is also situations where mistakes or errors could have been made in the report. Today we’ll look at 5 common errors to look for in your appraisal report if it comes in low to aid you if you decide to challenge a low  appraisal.

Trust But Verify- One part you may want to check on is the gross living area (GLA)of the home, or in other wordstrust the heated and cooled square footage. While you are not expected to know what this is for your home you can check what the latest appraisal has against what a previous appraisals shows. No two appraisers are going to arrive at the same area calculations for your home’s square footage due to rounding, however they should be fairly close.  If there are large differences, and you have not made any changes in the living area of your home, then you may want to ask the appraiser to double check this. This is not to suggest that the prior appraisal was correct and the new one incorrect but it is something that deserves looking in to . It may very well be that the previous appraisal is wrong, but unless you bring it to the attention of the appraiser you will never know. If the living area is under stated then a correction could make the value higher.

appraisal_adjustmentsTo Adjust Or Not, That Is The Question- The next area to look at for errors is the part of the report where adjustments are made. This is on the grid page where the sales comparables are shown. Major features of the subject and sales are listed, with adjustments being made for differences between them. Again, you are not being asked to know what the dollar adjustment should be, however if adjustments have not been made for obvious differences then this could be why the appraisal is coming in low. Let me give you an example. If your home is on a golf course and one of the comps is not, and no adjustment is made for this, then this could give an inaccurate indication of value. What typically occurs is that if the sale comparable is superior to the subject then a downward adjustment is made to the sale and if the comp is inferior then an upward adjustment is made. So even if an adjustment amount is made you want to make sure that the direction of the adjustment is correct. Both the amount of the adjustment and the direction of the adjustment are critical factors and can result in the final value being off.

Just The Facts Ma’am- Whenever I speak with homeowners during an appraisal inspection I always ask themjust_the_facts about recent updates or renovations they have made to their home. These improvements can result in significant increases in value if buyers in the market find them valuable and are willing to pay for them. If you have made significant improvements to  your home but this has not been reflected in the appraisal then this could also result in your home’s appraisal value coming in low. It is best to let the appraiser know this up front, however if you failed to do this then you can submit the information to the appraiser and ask them to consider the updates and the renovations, especially if some of the improvements are not readily visible. It is quite possible that considering the improvements could increase the appraisal value of your home.

closet_bedroomBedroom or Not?- The number of bedrooms and bathrooms in a home is another area you can check to make sure it is accurate. These are features that potential buyers for a home find important and which can add value depending on where the property is located, as well as how many bedrooms and bathrooms it has compared to what is typical. As I explained previously, you don’t need to know how much the adjustment is suppose to be, however you should check to see if an adjustment was made at all for differences in the number of bedrooms between the subject and sale comparable. One thing you may want to keep in mind though is what classifies a room as a bedroom. From an appraisers perspective it must have a closet.

Apples and Oranges- The last area of the appraisal to check out is the salesare the appraisal comps good comparables used in the report. There can be various reasons the report may not contain the best comps available so I thought I would cover some of the most common to look for. Geographic competency has been in the news a lot lately because of the proliferation of Appraisal Management Companies (AMC’s). It is no secret that some AMC’s will hire the cheapest appraiser available regardless of where they are located or their lack of knowledge of the market. This may cause problems if the appraiser does not subscribe to local data services that provide sales comparable information. If they do not use these local data services they may not know of the best and most recent sales to occur, which could result in the final value estimate being incorrect. If you know of a home that sold, and you believe it is comparable to yours but was not used in the report, then you should make this known to the appraiser.

for sale by ownerAnother problem that can occur is not really the result of the appraiser doing an incompetent job but it involves the appraiser excluding a sale that they were not aware of. Not all sales involve a real estate agent, and it is these sales that may be more difficult to find unless you know what to look for. Private sales, commonly referred to as FSBO’s (For Sale By Owner), can occur and the only way to find them is to look them up in county records by searching for the buyer or seller’s name. If you know of a private sale that occurred, and you believe the home was very similar to yours, you can make this information available to the appraiser for them to look up. The appraiser will need to determine if the home is a true comparable but at least they will be aware of it and consider it in the appraisal analysis. Again, if you know about this sale before the appraisal is done let the appraiser know about it while they are at your home.

If your appraisal comes in low I hope that these tips on where to look for common mistakes might help you. It is not always the fault of the appraiser if your home does not appraise for what you think it should because the real estate market has fallen off over the last several years, however if there is an error in the report then knowing where to look can help you if you decide to challenge your appraisal.

If you have any questions leave a comment below. If you found value or entertainment in this post you can subscribe by email or RSS feed. Thanks for visiting.


  1. Kathleen Morris says

    Appraiser made deliberate errors on our appraisal. Our home is grandfathered in as it
    is over 150 years old, had existing old barn also. We have lived here (15 acres rural) for over 40 years. We are NOT required to get permits to do home improvements, as this is a
    grandfathered homestead. We have tried to get a refinancing (lower interest rate and cash out) to find the appraiser made several real errors on the facts of our property).. she insisted we did improvements without a permit??? We had done refi 3 times in the past and NEVER was there any issue of permits? Is it a requirement for appraisers to act as township police on matters of permits? This whole ordeal smells of a sham and a set up. The whole appraisal ordeal appears to be skewed to what ever the appraiser wants and even smells of corruption?

    • The appraiser has nothing to gain in noting that it appears that you did improvements without permits. Is the appraiser from your area and do they know that permits are not required? Are you using the same lender you used in the past? If so, I would suggest you ask them to use the appraiser they used last time. It is my understanding that the lender would want the improvements to meet code, however this could not be verified if it was unpermitted. Are you able to get insurance on the house if the insurance company does not know it is up to code? This sounds like a localized incident and you may need to find out from local officials what is the protocal for a situation like this.

  2. Tony Oppenheim says


    You state in this post that a room must have a closet in order to be considered a bedroom, but in our state, PA, the building code does not require a closet, a wardrobe is acceptable. Since this is furniture, which would not be included in a home sale, it seems like it shouldn’t be a factor in an appraisal.

    In our case we have two rooms which we’re not using as bedrooms at the moment, but the rooms were built to code to be bedrooms in the future. They have all the safety features required (smoke detectors inside and outside the rooms, two or more means of egress, etc.). They share via the foyer a full bathroom. They are both more than triple the required size to be considered bedrooms. There’s plenty of space to add a closet or a wardrobe if so desired.

    Why would an appraiser be able to require a closet if it’s not required by code?

    When we questioned this in the report the answer we received was:

    “- these rooms do not have the functional utiltily of bedrooms.”

    Any advice?


    • Thanks Tony for your question. As far as building codes go many areas have different requirements. Your code may indicate that your rooms are acceptable for use as bedrooms but are they ideal? A good way to see what home buyers expect is to go and look at new construction and see what is being built. Are new homes being built without closets in the bedrooms? I would guess that all new construction homes have closets because that is what buyers in today’s market expect. That is not to say that you can’t use the rooms in your home as bedrooms but from an appraisal standpoint it has to be compared to today’s standards. Appraisers measure market reaction to various features in homes and in today’s world I think most expect closets.

  3. Great info. Thanks for sharing it.

  4. I purchased 23 acres of land in Texas and had a custom home builder build my home. Prior to full construction a VA appraiser gave it a value of 357k. Five months later the same appraiser gave it a value of 300k. So low that I can’t make 60k up in cash. I made several attempts to call the appraiser but he refuses to return my calls. I am in a tight position as I can’t get a closing date and if this goes bad I stand to lose my new home and acreage. All because of one VA appraiser. There are obvious mistakes in the report. Shorted on number of acres, one full bathroom not mentioned in the report, and the square footage missing about 100 feet. Any ideas? Thanks

  5. The best course of action would be to contact the bank or lender that you are using. I would type up a one-page memo outlining the errors in the report so that the lender can provide this to the appraiser. Doing it this way can provide actionable items for the appraiser to work on. The difference in acres and bathroom, as well as the square footage, could make up the difference. Good luck!


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