A real estate appraisal is a critical component of most home buying and selling processes, determining the property’s market value. However, if you believe the appraisal significantly undervalues your property, you have the right to appeal.
In this blog our New York Real Estate Appraisers will guide you through the process of appealing a real estate appraisal, outlining the steps involved and the crucial factors to consider. Disagreement with an appraisal isn’t uncommon. Several factors can contribute to a perceived undervaluation:
- Insufficient Comparable Properties: The appraiser might have relied on comparables that were not truly similar to your property in terms of size, location, features, and condition. If the comparables are older, smaller, or in less desirable locations, the appraisal might be lower than expected.
- Overemphasis on Negative Factors: The appraiser might have overemphasized minor flaws or needed repairs, disproportionately impacting the final valuation. While these factors should be considered, they shouldn’t overshadow the property’s overall value.
- Appraiser Incompetence or Bias: In rare cases, the appraisal might reflect incompetence or bias on the appraiser’s part. This is harder to prove but should be considered if you have strong evidence to support your claim.
- Market Fluctuations: Rapid changes in the real estate market can sometimes lead to appraisals that lag behind current market values. If the market has experienced a recent surge in prices, the appraisal might not reflect this increase.
Appealing the Appraisal
The appeal process varies depending on the circumstances of the appraisal and the lender involved. Generally, the steps include:
- Review the Appraisal Report Carefully: Thoroughly examine the appraisal report for inaccuracies, inconsistencies, or omissions. Identify specific points of disagreement and gather supporting documentation.
- Gather Supporting Evidence: Collect evidence to support your claim that the appraisal undervalues your property. This might include recent sales of similar properties in the same neighborhood (better comparables), professional inspections addressing any concerns raised by the appraiser, or market data showcasing recent price increases.
- Contact the Appraiser: Before escalating the appeal, politely contact the appraiser to discuss your concerns. They might be willing to review their work and make adjustments based on your provided evidence.
- Contact Your Lender: If the appraiser is unwilling to revise their valuation, contact your lender to initiate a formal appeal process. Most lenders have specific procedures for handling appraisal disputes. Clearly articulate your reasons for the appeal and submit all supporting documentation.
- Request a Second Appraisal: Your lender might agree to order a second appraisal from a different, independent appraiser. This provides an alternative valuation and helps resolve the discrepancy.
- Consider Negotiation: If a second appraisal still doesn’t meet your expectations, you might need to negotiate with the lender. This could involve adjusting the purchase price or finding other solutions to bridge the gap between the appraisal value and your desired price.
Conclusion
Appealing a real estate appraisal can be a complex process, but it’s a valuable option if you believe the valuation is inaccurate. By carefully reviewing the appraisal report, gathering supporting evidence, and following the proper channels, you can increase your chances of a successful appeal. Remember, a well-supported appeal significantly increases your chances of achieving a fair and accurate property valuation. Consulting with a real estate professional can provide valuable guidance throughout this process.