What to do when the house doesn’t appraise

What to do when the house doesn’t appraise

Do you know what to do when the house doesn't appraiseIf you’ve ever had a home under contract that didn’t appraise you know it can be very frustrating. Whether you’re client is buying a home or selling one the results are just as devastating. There is a specific process that you can follow that I want to share with you today that will help you present your case and give you the best chance for a value reconsideration.

Common errors to look for

I wrote a post previously about 5 common errors to look for in your appraisal report if it comes in low so I won’t concentrate on that here. If you read that post you will see that there are several places you can look where errors typically occur. The report may look daunting at first but once you look it over it’s pretty straight forward and you’ll be able to recognize the different areas.

In a nutshell the major areas you’ll want to check on is the accuracy of the gross living area, or square footage. Is it similar to previous appraisals? Does it fall way short? Have adjustments been made where appropriate? You don’t need to know how to arrive at adjustments but you can see if an adjustment was included or left out by looking at the areas of comparison included in the adjustment grid. Was recent improvements or remodeling included in the final opinion of value? If not did you tell the appraiser about these items? Is there a sale that you are aware of that was not included in the report? Sometimes private sales are harder to uncover unless you know where to look. Maybe the appraiser looked at it but decided that it was not a true comparable. The only way you will know if they considered it is to ask, or include the information about it in a reconsideration of value.

The last area to check on is whether the sales are truly comparable. It is not uncommon for appraisers from other cities to do appraisals in areas they are not as familiar with. Maybe a sale is in another school system that is not comparable. These are all areas you want to look at for mistakes.

Asking for a reconsideration of value

Most lenders have a process in place where you can ask for a reconsideration of value. They may even have a specific form that you fill out, however if they don’t you can put together something yourself. You should think of this as an opportunity to present your case in favor of the value being changed, but the request must be backed up with helpful information that the appraiser can use.

Put in on paper
All the good information that you have can be wasted based on how you present your case to the lender or appraiser.Appraisal value reconsideration If you go in with guns blazing and a bad attitude then they’ll just think you’re a lunatic, but if you present your case in a clear logical fashion with solid facts that the appraiser can use and act upon then the chances for a positive outcome are increased.

Anytime I put my thoughts on paper I am better able to articulate my point and take emotion out of the picture. A one page synopsis is best because it will not overwhelm the appraiser. If you are able to include a short bullet list of points of concern and possible solutions in the form of potential errors in the report and/or additional sales then you are giving them something to work with.

Ask questions
In regards to errors you might ask something like “why was there not an adjustment on sale #2 since it was not on the golf course and the subject was”? This is an easy question for the appraiser to answer and it might have a material affect on the final opinion of value. By using a bullet list for each question you can include all your concerns in a clear concise way.

Provide something to act on
If you think that the value is incorrect, what are you basing your decision on? Did you do a CMA and come up with a higher value? Did you provide the CMA or sales to the appraiser? Some appraisers don’t mind looking at sales provided by the agent while others will not do it. If you did not provide sales to the appraiser, and there were sales that you considered very comparable but they were not included in the report, then now is the best time to provide that information.

If you personally knew about the sale and the condition of the home then this information should also be passed along to the appraiser. The agent should remember though that the appraiser gets the final say about including it in the report. They must decide if the sale qualifies as a comparable and if it meets underwriting guidelines that the lender has.

By following the steps described here you will present your case in a more logical and professional way. This will increase your chances of  a successful value reconsideration.


Have you had success in a reconsideration of value? If so, what type of information did you provide to get it, and what method did you use? If you have anything to add or a question you need answered then leave a comment below, I always appreciate hearing your take on the matter.

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  1. Lisa Egstad says

    In Santa Rosa Beach and Destin, Florida, we at LAH Real Estate at the Beach often see appraisals come in lower than sale price because we are in an appreciating market. The appraisals are technically “accurate” but with so many more buyers in the spring the values increase rapidly this time of year.

    If you are thinking of buying a beach property, the sooner the better! If you own property at the beach, inventories are low, so it is a great time to list. Feel free to contact LAH Real Estate at the Beach for more info: (850) 517-9898 or LisaE@LAHRealEstate.com

    • Lisa, I use to work on the coast years ago and remember the seasonality of the sales, that is a good point. An appraiser who is keeping up with trends will know about characteristics of the market. This is a good example of when listings and pending sales are very important to look at.

  2. Tom Molinari says

    Oh yes, one other thing – if the homeowner or the buyer does not understand the adjustment process or the validity of some of the comparable sales utilized, then they could hire another appraiser, in the capacity as a consultant, to determine if the analyses in the original report are reasonable or unreasonable, if the comparable sales were the best available, and if the conclusion of market value was accurate.

  3. We are only human….as an Appraiser, I strive for perfection in my reports but sometimes I miss something like an adjustment I noted in the analysis but forgot to make on the grid. I am happy to correct any errors that affect value, however, your new faucet, ceiling fan, or future new carpet you told me you want to install is not going to create the extra $20,000 value today that you “need” (real case scenarios). If you know of a closer, more recent or more similar home, I will look at it. However 99% of the time it is a much bigger size or from a different neighborhood and very rarely is it a better comp. More often when I grid it, the adjusted value would actually brings the subject value down.

    In sympathy of owners, buyers and agents, I have seen some horrible appraisals that amaze me how those appraisers are still in business. I’ve seen an appraisal of a SFR (no age restrictions, not gated) with all the comps used from a gated, age restriction development over a mile away. This was completely absurd as I found ample recent comps from within the subjects own development. What can you do to insure proper valuation? Read the appraisal report! Look at the location map, are the comps nearby? Look at the photos, do they look similar to your home(1 story/2 story, detached/attached)? Look at the grid, do the adjustments make sense and are they consistent? Look at the date of sale, are they recent? If anything seems unusual, does the appraiser explain why he/she used it? I often have to include an odd comp to bracket a feature of the subject, solar panels, lot size, pool…but I always explain why the comp was used. The Lender normally requires all features to be brackets.

    Once again, I thank you Tom for your informative blogs and the opportunity to re-post them and add my own 2 cents.

    • I love to hear stories from the real life experiences of appraisers and appreciate you sharing Cindy. I think the best thing we can do for the general population, including agents and homeowners, is to be a source of education for them. In the past what appraisers do has been a mystery even to agents who work closely with us but we can change that by being a trusted resource to them. A resource that helps educate them on the appraisal process to let them know why and how we do what we do. Keep up the good work Cindy.

  4. Tom Molinari says

    Great advice Tom. One thing that I would add in the case of purchase appraisals. After a cursory review of the facts for appraiser errors, go back to the seller and ask to reduce the price based upon the appraisal. Depending upon the circumstances, the seller may agree to a lower price. There are times when the price is not substantiated by the best neighborhood comps. It never hurts to try to get a price reduction.

    That being said, the market in my area is heating up and multiple offers over asking price are again entering into the picture. If there are back up offers, it is unlikely that the seller will reduce the contract price. And, when there are multiple offers over asking price, the likelihood of the closed sale comps not supporting the sale price increases dramatically. It is then incumbent upon the appraiser to investigate contract, or pending sales, to determine if the market conditions have changed and pricing has recently increased in the subject’s market area. If the appraiser has not contacted listing agents on pending sales in the neighborhood to uncover pending sale prices, there may be a strong case for reconsideration.

    • Tom, you make some very good points. If there are no errors in the report then it should definitely be used as a negotiation tool. That is why the appraiser is so important to the real estate market, as they are an unbiased and disinterested third party. I talk to agents all the time about considering listings and pending sales. They are very important in understanding an appreciating market as they reflect what is going on in the market right now and measure buyer and seller behavior. Thanks for sharing.

  5. Great article Tom. The only thing that I would add is that if the appraisal comes in low (“doesn’t appraise”), it does not mean that the appraisal report needs to be reconsidered. Agents need to understand that market value is the most probable price and not every property exposed to the market with a willing buyer and a willing seller represents market value. Some buyers are just willing to pay more than the typical buyer or most probable buyer. With that said, I also understand that agents are advocates for their clients and if I was an agent and the appraisal came in lower than contract, I would probably try to get the value reconsidered.

    • I agree Gary. I think the agent or seller needs to look at the man (or woman) in the mirror and ask themselves if they priced the home for what they “wanted” to get out of the house or for what the market would support and the typical buyer would be willing to pay. This all comes down to pricing and whether they did their homework up front.

  6. Good tips, Tom. It’s good to know what the options are when the value comes in lower than the agreed upon contract price (whether it really should be lower or the appraisal was botched somehow).

    • Thanks Ryan, you make a great point. The appraisal could be botched or it could be spot on. I would think 9 times out of 10 the appraisal is probably correct but in that rare instance it is not then the areas of the report I discussed could have some issues.


  1. […] Horn, an appraiser from Birmingham Alabama, recently added a great post to his blog: “What to do when the house doesn’t appraise.”  In it, he provides a step by step process for dealing with low appraisals including revealing 5 […]

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