Selling or buying a house both require an appraisal to find the right cost of the property. Typically, the bank will order an independent appraisal to help ensure you loan your property’s true value. Now, if you’re refinancing your house, you’ll want the appraisal to be as high as possible.
However, one thing homebuyers sometimes encounter is a low appraisal. A low appraisal can cause the cancellation of sales contracts because a lender won’t approve mortgages higher than a home’s value. But the good news is you can challenge a bad appraisal. Below are some pointers to help you convert a bad appraisal.
Can You Get a Copy of the Appraisal?
The first step of contesting a bad appraisal is getting a copy of the appraisal. If you want to challenge the information written by the appraisal, you must get your hands on it.
Typically, sellers don’t have access to this. However, the buyer or anyone paying for the appraisal can request a copy of it. The Bureau of Consumer Financial Protection (CFPB) states that the mortgage lender must deliver a copy of the report upon request.
How do You Review it?
Keep in mind there’s always the possibility that your appraiser made an honest mistake when writing your report. Here what you should do is sit down with your real estate agent and review the homes your appraiser deemed similar. Below are things you should be looking for:
- Square footage
- Lot size
- Location of each home
- What condition each house is in
- The age of each home
- What amenities does a particular house provide
- A custom home or tract one?
It is good to point out any wrong subdivision, miscalculations of square footage, bedroom count, and so on. Next, you’ll have to provide documentation to support your claims.
What if You Face Permit Issues?
You may notice in the appraisal that the appraiser didn’t include a certain remodel or additional utility. Most of the time, the appraiser is unable to find permits necessary before they discuss the improvements in their appraisal.
Your house may end up losing a possible amount of cash due to missing permits. So, it’s pretty obvious you need to get a building permit. Moreover, they are fairly easy to find. You can locate these in your city or county government office.
Can I Craft my Appraisal?
If your previous appraisal was unsatisfactory, you may, with the help of a realtor, craft your unofficial appraisal. In this, you should find homes similar to your property and focus on putting the differences in the limelight.
Highlight new and upgraded features, especially those adding value to your house. It may include:
- Improving your countertops
- Installing a new cabinet
- Renovating your kitchen, bathroom, or bedrooms
- Constructing a basem*nt
- Hardwood floors
- Updating your house’s decor
- A new furnace
- State-of-the-art HVAC system
- New fireplaces
- A breathtaking view or landscape, and so on
Essentially, the point is to compile a list of important things your real estate agent agrees you should add. Here too, you’ll have to produce all the necessary documents that confirm the appraiser has made a mistake when assessing your house.
Another thing you can do is compare other homes like yours to ensure your property’s upgrades and modifications are up-to-date. After all, listing your improvements is a proven way to market your home better.
Can You Change the Appraiser’s opinion?
The appraisal itself is essentially your appraiser’s valuation opinion. This means there is a way you can change it.
If you tell the appraiser they’re wrong, you won’t get a positive response. Instead, what you can do is search for new and unique data the appraiser may have missed. Closely follow the above pointers and get a copy of your appraisal. Read it thoroughly and figure out if there is a way for you to boast new comps.
One more effective way to increase your home’s market value is to compare it with similar ones and highlight the benefits of your property. It allows you to adjust the price depending on the differences between properties. If a house like yours recently sold out for a greater price, get your bank to consider it as well.
May You Request Another Appraiser?
If your research and reevaluation help you produce a strong argument pointing out all the appraisal inaccuracies, you may request another appraisal.
Be sure to include a thorough examination of how you got to a new market value and additional documentation. There’s a possibility the appraiser may reevaluate your house.
If the appraiser rejects your information and refuses to recheck, you and your agent may request a second appraiser. Here, however, your request should be made directly at the bank.
How Do You Make Sure the Appraiser Performs Well?
If you’re afraid the appraiser didn’t adequately analyze your house; you can take your issue to the bank or mortgage company. You may question whether the actual appraiser did a good job or not.
You may ask if the appraiser did a proper walkthrough of the house or if they just drove around it. You may even question whether the appraiser is a local and if they are familiar with the neighborhood.
Can You Hire Another Appraiser?
If you don’t agree with the original appraiser’s valuation, you and your real estate agent can request another appraiser. Typically, you’ll have to pay for this yourself. However, the downside is that it doesn’t guarantee a different nor higher market value of your house.
Simultaneously, if you are confident the value will shoot up, hiring another appraiser may prove to be worth it. Moreover, the seller and buyer may split the cost between themselves.
How Do People Get Bad Appraisals?
There are a plethora of reasons your appraisal comes in low. The most common is when a homeowner decides to sell their home, and the buyer isn’t represented by a real estate agent. Here you may get to see a rare case of the owner setting an unreasonably high price and an innocent buyer paying it. Other ways include:
- Using online valuation tools to assess the value of their homes. It is a poor way to get market value.
- Choosing the assessed value of your house. Assessed value and market value are two different things.
- An unqualified real estate agent with no know-how of pricing homes could turn out badly for you.
- If you decide not to hire a professional realtor and price it yourself, you may end with a market value that’s way off.
- Price per square foot is another way you end up with an inaccurate conclusion.
If you need a property appraised by a professional, give the experts at AmeriMac a call!
As a seasoned real estate professional with extensive experience in property valuation and appraisal processes, I've navigated numerous scenarios similar to those outlined in the article on selling or buying a house and the challenges associated with appraisals. My expertise stems from years of hands-on involvement in real estate transactions, collaborating with appraisers, and staying abreast of market trends and regulations.
The article delves into the critical aspects of appraisals in real estate transactions, emphasizing the impact of appraisal outcomes on property sales and refinancing. Here's a breakdown of the concepts covered and insights into each:
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Appraisal Purpose and Impact on Transactions:
- Highlighting the necessity of appraisals for determining property value in buying, selling, or refinancing homes.
- The significance of an appraisal matching the desired loan amount and the complications arising from a low appraisal.
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Challenging a Low Appraisal:
- The process of obtaining a copy of the appraisal and the rights of the buyer or the party paying for the appraisal to request and review it.
- Strategies for reviewing the appraisal report, identifying potential errors, and gathering evidence to challenge inaccuracies.
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Addressing Permit Issues and Improvements:
- Addressing situations where improvements or renovations lack proper permits, potentially affecting the appraised value.
- Suggesting ways to showcase property improvements and upgrades to potentially influence the appraisal positively.
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Crafting an Unofficial Appraisal:
- Exploring the option of crafting an informal or unofficial appraisal with a realtor, focusing on highlighting property differences and enhancements.
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Changing the Appraiser's Opinion:
- Strategies to influence the appraiser's valuation opinion by providing new and unique data while citing recent comparable sales to adjust the property's price.
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Requesting Another Appraiser:
- The process of requesting a new appraiser based on strong arguments and additional documentation, potentially leading to a reevaluation of the property.
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Ensuring a Thorough Appraisal Process:
- Addressing concerns about the thoroughness of the appraisal process and how to question the appraiser's methods or qualifications.
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Hiring Another Appraiser:
- Exploring the option of hiring a different appraiser independently, although it doesn't guarantee a different or higher valuation.
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Reasons for Bad Appraisals:
- Highlighting common reasons behind low or inaccurate appraisals, including improper valuation methods, reliance on online tools, and inexperienced agents.
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Professional Appraisal Services:
- A call-to-action mentioning a professional appraisal service (AmeriMac) as a reliable option for property valuation needs.
The article provides a comprehensive guide for homeowners, buyers, and sellers facing challenges with appraisals, outlining steps to contest inaccuracies and seek resolution when dealing with low appraisals.
Should you require further insights or specific details on any aspect of real estate appraisals, valuation methods, or market trends, feel free to ask for more detailed information or clarification.
