A real estate appraisal is a crucial part of the home buying and selling process, determining the fair market value of a property. However, sometimes an appraisal comes back lower than expected, leaving buyers and sellers frustrated. If you believe the appraisal undervalues your property, you have the right to appeal. This blog will guide you through the process.

Reasons for Appealing A Real Estate Appraisal

Before appealing, understand why you believe the appraisal is inaccurate. Common reasons include:

• Comparable Properties: The appraiser may have used inappropriate comparable properties (comps) that don’t accurately reflect the subject property’s features, location, or condition. Outdated comps are a frequent issue.
• Market Conditions: The appraiser might not have adequately considered current market trends, resulting in an undervaluation. Rapidly changing markets can make this a significant factor.
• Errors or Omissions: The appraisal might contain factual errors or overlook key features of your property. This could include square footage discrepancies, upgrades not mentioned, or mischaracterizations of the neighborhood.
• Appraiser Bias: While rare, there might be instances of bias or lack of due diligence on the part of the appraiser.

The Appeal Process

The appeal process generally involves these steps:

1. Review the Appraisal Report Thoroughly: Carefully examine the appraisal report for any errors, omissions, or inconsistencies. Note specific details that support your belief that the valuation is too low.
2. Gather Supporting Documentation: Collect evidence to support your appeal. This could include:
   • Recent comparable sales: Provide data on recently sold properties in the area that are similar to yours but sold for higher prices. Include addresses, sale prices, and relevant details.
   • Property upgrades: Document any recent improvements or upgrades to your property, such as renovations, additions, or landscaping improvements, with photos and receipts.
   • Market analysis: If you have access to market data, provide it to support your argument. Real estate websites, broker reports, and local market data can provide support.
3. Contact the Lender: Inform your lender that you intend to appeal the appraisal. They’ll usually have a specific procedure for handling appeals, which you’ll need to follow carefully. They may have a form to complete, or they may just require you to submit your supporting documents.
4. Submit Your Appeal: Submit your appeal in writing, including the appraisal report, your supporting documentation, and a clear explanation of why you believe the appraisal is inaccurate. Be professional, polite, and provide specific and factual evidence to support your claims.
5. Negotiation and Reconsideration: The lender will review your appeal and may contact the appraiser for clarification or a re-evaluation. They might negotiate a compromise, or they may request a second appraisal from a different appraiser.
6. Second Appraisal (if necessary): If the lender deems it necessary, they may order a second appraisal from an independent appraiser. This appraiser will conduct a new assessment, considering the information you provided in your appeal.

Conclusion

Appealing a real estate appraisal can be a complex process, but understanding the reasons for the undervaluation and gathering strong supporting evidence significantly increases your chances of success. Thorough preparation and a clear, concise appeal are crucial. Remember to remain professional and maintain open communication with your lender throughout the process. While there’s no guarantee of a successful appeal, a well-prepared case increases your chances of achieving a fair and accurate valuation of your property.