Appraisals are part and parcel to selling or refinancing a house. Worst case, you and your seller want that appraisal to come at a level that at least amounts to the asking price of the property.
If/when an appraisal does not meet your seller’s expectations, here are ways to dispute a low home appraisal, according to Than Merrill, a real estate investor and founder of Fortune Builders, an educational service for real estate investors.
- Request a copy of the appraisal report from the buyer’s real estate agent. Federal law through the Bureau of Consumer Financial Protection stipulates that appraisal reports go to buyers only.
- Make sure your seller checks every detail of that appraisal report. Why? Appraisers, like everyone else, make mistakes. If, for example, the report indicates there are 2 bedrooms when in actuality there are three bedrooms, document (photograph) the incorrect data point and fight it.
- Encourage your seller to contact her/his lender and request a value appeal. Any claim your seller makes per that value appeal must be substantiated with evidence.
- Provide updated comps on sold properties. Home prices have been soaring for yeas now and it just may be that the appraiser has not kept up with the market.
- Encourage your seller to be meticulous about including any permits the seller had was issued when she/he made any improvements and/or additions to the property. Those permits are evidence of those improvements and/or additions and therefore, the increased value of the property. Without those permits, there is no evidence.
- Make sure that you as the real estate agent and the seller point out to the appraiser any upgrades and improvements made to the property. Sometimes those improvements/upgrades are so “natural” to the property that the appraiser doesn’t see them.
- Sellers, make sure your real estate agent meets with the appraiser and that your real estate agent is fully armed with comps on sold properties and all information about improvements/upgrades/additions.
- Appeal the “fit or suitability” of the appraiser if the appraiser lives 50-100 miles away from the property. An “out-of-town” appraiser may not be the best to assess the value of a home if that appraiser is unfamiliar with the market and neighborhood of the home. Also, suggest to your seller that she/he contact her/his own lender right away if the appraiser is not a local.
- Lastly, if nothing else budges the needle, suggest that the seller hire and pay for another appraiser to do a valuation on the property. This may/may not impact the situation but having a second opinion can’t do any harm.
