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10 expert tips to help avoid a low valuation
You can take some proactive steps to help ensure that your appraisal reflects the true value of your home.
1. Make a list of features and recent improvements you’ve made to the property
“A lot of times, an appraiser will come and look at an air conditioner, and they’ll see the age on it or check the permits when they pull permits,” says Paul Fonseca, a top-selling agent in Fort Myers, Florida, with 30 years of experience. “But it’s different when you tell them, ‘This was just put in, and it’s a Trane air conditioner, and it was $7,000.’”
2. Provide maintenance records
Neglecting routine maintenance can negatively impact the sales price. Let the appraiser know you’re on top of things by providing before-and-after photos, receipts, and renovation paperwork to help the appraiser adjust values accordingly, says Santiago Valdez, a HomeLight Elite Agent in Chicago, Illinois, who’s sold 68% more single-family homes than his peers.
3. Get a comparative market analysis
“It’s basically a free appraisal,” Walters says. For a comparative market analysis, real estate agents compile a list of sales of homes similar in age, size, and style, typically within a one-mile radius of your home. This document indicates averages and where your house fits in the range of sales prices. “It’s a good tool for pricing.”
4. Get a pre-listing appraisal
“Sellers can get an appraisal done before they put their house on the market,” Grossmeier explains. He says doing a pre-listing appraisal will give them an EPO (easy price option) indicating a value range using current data. This can be particularly important for unique properties that don’t have many comps, but for the average home with lots of comps, Walters advises her clients not to spend the extra money.
However, Madalyn Suits, who sells properties 64% quicker than the average Atlanta, Georgia, agent, says she only recommends a pre-listing appraisal on unique properties that are difficult to find comps for or when she expects “a huge problem.”
5. Check that the appraiser is highly qualified
The buyer’s lender usually requests an independent appraisal through an Appraisal Management Company (AMC), which selects the appraiser. However, you still want to make sure the appraiser is qualified and has a designation from a recognized professional appraiser organization. The appraiser should also be licensed or certified by the state.
In her Georgia market, Suits knows the strengths and weaknesses of different appraisers that serve the area. In multiple-offer situations, she sometimes advises sellers to choose a buyer based on the appraiser.
6. Provide a list of comps
Your agent will prepare a package of useful information for the appraiser, including a list of recent comps in your neighborhood. “The burden falls on the listing agent to provide comps,” Suits states.
Mitchell concurs. “Our job is to defend the price. The agent already has the comps.”
7. Provide a CMA or pre-listing appraisal
“Ninety percent of our work is research,” Grossmeier says. “Appraisers provide a realistic value supported by the market.” Why not make their job a little easier by sharing your documentation?
8. Make sure your home is clean and tidy
Officially, it has no bearing on the appraised value of your home, but it can make access easier and show off features better if it’s clean and orderly. Tamara Bourne, a top-selling agent in the Atlanta area who sells 84% more properties than her peers, focuses on painting, power-washing, curb appeal, decluttering, and depersonalizing.
Bourne believes these five areas of home preparation have played a vital role in her track record of successful appraisals. She emphasizes, “Our homes appraise — period.”
9. Learn how different loan requirements can impact an appraisal
FHA and VA loans have stricter appraisal requirements and different underwriting guidelines. These might include upgrading outdated two-prong outlets, paying more attention to wood rot and earth-to-wood contact, and other detailed items, such as replacing single pull-chain light bulb sockets in a closet, crawlspace, or attic.
Different government agency appraisal requirements vary slightly. To see a comprehensive overview of the FHA loan requirements, HUD provides a handbook for appraisal guidelines.
10. Know your options for challenging a low appraisal
It can be difficult to challenge a low appraisal since “the seller won’t know the appraised value,” Walters points out. That’s because the lender hires the appraiser and is required by federal law to provide a copy of the appraisal report to the buyer, not the seller, according to the Consumer Financial Protection Bureau.
Sellers should have their agents go over it, Suits urges. The seller’s agent can request a copy of the report from the buyer’s agent. If there are inaccuracies, missed features, or incorrect information, the seller’s agent can then contact the lender to provide documentation proving the seller’s claims about the property.
Part of the challenge process can include requesting a reconsideration of value (ROV), which allows the seller or buyer to appeal to the lender, challenging the property value determined by the appraiser. The ROV enables either party to highlight what they consider errors in the appraisal report.
“The challenge is not to offend,” Mitchell notes. “There’s a protocol to refute [an appraisal].”
She says it’s rare for an appraiser to adjust the value. However, it’s possible to order an updated appraisal — particularly if new comps came in too late to be used in the original.
“The biggest thing,” Suits concludes, “is to be prepared with the numbers.”
