By admin1
The appraiser was rushed
Rachel Massey, Senior Real Estate Review Appraiser at JPMorgan Chase & Co., explains that a home’s appraised value may sometimes fall below the sale price due to inadequate research. When appraisers are under time pressure, they may not identify the best comparable properties to use, which can lead to an inaccurate appraisal. Ensuring that the right comps are chosen is essential for an accurate market valuation.
Seller tip: Ask the lender for an appraisal review or reconsideration if you think the appraiser didn’t account for all of the features and characteristics that could support a higher valuation.
The appraiser doesn’t have local experience
If an appraisal comes in erroneously low, it could be due to an appraiser using poor comparable sales data or just not being competent in the market, notes Mason Spurgeon, certified general appraiser and owner of Spurgeon Appraisals.
“Some banks will engage appraisers who are from out of the area and don’t have access to the local sales data,” he says. “In that case, the appraiser is forced to use data that is fed to them from other sources, and that may or may not be correct.”
Seller tip: During your appraisal appointment, have your agent provide the appraiser with a list of recently sold homes in your neighborhood that are similar to yours and support your contract price.
You overpriced your home
According to Spurgeon, it’s common for appraisals to come in low when both seller and buyer choose to work without a real estate agent. In these cases, the seller may have priced their home above market value, while the buyer doesn’t recognize the discrepancy. “If the buyer or seller employs a Realtor® or an appraiser in their transaction, the sale price and market value are typically in line,” Spurgeon says.
Seller tip: Consider reaching out to a top real estate agent to guide you through the home-selling process or, at the very least, request a broker price opinion (BPO) to help assess your home’s value.
Your home shows significant wear and tear
Deferred maintenance and visible issues can make a home look less valuable to an appraiser. Major problems like a leaky roof, foundation cracks, or outdated electrical systems signal costly repairs, which can lower the appraised value.
Even smaller issues add up, so appraisers often factor them in when comparing your home to similar properties. Keeping your home in good repair can help prevent surprises during the appraisal. The better your home looks and functions, the more likely it is to meet or exceed the contract price.
Steps to challenge a low appraisal when appropriate
As the homeowner, you can’t directly challenge the appraisal report. Only the appraiser’s client, which is usually the lender, can ask the appraiser to make data corrections or consider additional information.
