How do you dispute an appraisal?

As a listing agent I meet the appraiser at the property and discuss the important aspects of the home, including all the important improvements that they may not see. This will show value that they may otherwise miss. I do this also as a buyers agent if the listing agent isn’t going to be there. I also do my homework ahead of time for offers. Running comparable sold properties and discussing with your buyers before offering is very important. Making sure there are comps to support. In 27 years I have only had 2 properties (appraiser didn’t pull accurate comps) not appraise for selling price. Also counseling clients that if the property value, in a multiple offer situation, does go way high that they have the additional cash to bring in.

Somehow agents continue to either truly not understand the appraisal process or pretend not to. Appraisers rep the lender, no one else. Underwriters require closed comparable sales so those are used and that is tempered with pending and active listings. Appraisers have no dog in any fight, they are an impartial opinion of value, yet agents seem to love the "they kill deals" when appraisals are below contract. Do the deal, have your buyer make up the short - or perhaps you didn't do your homework for them?

In the Spring of 2022 I was working with re-location clients. Home values were over-inflated due to low inventory and high buyer demand. This was creating multiple offer scenarios. When my buyers found the home they wanted, we learned we were competing against one other offer. The home was listed for $800,000, so we offered $810,000. Our offer was accepted. Everything was moving along nicely until the appraisal came back at nearly 150K below purchase price! This could surely blow the whole deal apart! We could have contested it, but my buyers were working with a lending institution known for being "difficult" so they chose instead to switch to a new lender. This lender rendered an appraisal right at purchase price and the deal was saved!

An appraisal report is not intended to verify the sales price, but rather to see if market data (comps) support the price. Appraisers must support their opinions of market value with recent sales and listings that have been verified. If your appraisal comes in low: 1. request a copy of the appraisal 2. contact your lender and request a value appeal 3. provide additional comps. 4. check for missing permits and point out any improvements that you have made & 5. get a 2nd opinion.

Understanding that the appraisal is for what purpose would help. So many thinks it is for the buyers, or some might even say the sellers. But truly it is for the investor. In the case of the bank, it's for the underwriter. They need to know if the loan is secure with the property. Overpaying is not against the rules, your buyer just needs to bring the difference to the table. So rising property values due to rising demand means that as soon as the demand is stabilized the value will decline. That is one reason so many people are upside down in their house today. Knowing your buyers' limits is key to making any offer. Stop trying to sell a buyer all they can afford for a bigger commission and that will help.

A appraisal report, which is the report that was written for a specific user and a specific timeframe, is written for a knowledgeable and educated reader in most cases. Giving a copy to your less educated real estate friend to look at is going to create more issues, in most cases. I would recommend you hire your own appraiser to review the appraisal professionally. Then if there are issues there is a process called a reconsideration of value. The lender is likely to have a form and the guidelines for its use. being respectful will get you further.

34+ yrs appraising....Good start is understand the definition of a comparable - "a reasonable alternative purchase to the subject". A 1200SF 3BR/2B ranch IS NOT comparable to the 3200SF 5BR/4B colonial next door. Comps must be recent - 6 mos or less best, a year if needed. Should be in the same competing market area, under a mile best. "Buyers want to pay that" or "Zillow says" or "my agent told me" is babble - show me the data.

I spent some years as a young real estate broker in Connecticut and New York, then a decade as an appraiser, and more recently 29 years as a buyer's agent. I have disputed appraisals and succeeded, but it is not remotely easy to do. You need two things. The first is a valid argument. There is little hope of changing the value if the appraiser has not legitimately in error. The other requirement is someone with the capacity to present the argument to the underwriter (in appraisal language and format the underwriter will relate to), and with documentation that undeniably supports your position. A seasoned agent, and a talented mortgage broker with years of experience, working together, have a chance.

The best advice I can give to an agent or homeowner disputing the value is to provide actionable items that the appraiser can work with. This might be providing information about the subject property that may be wrong in the report such as the amount of land or a certain feature that was left out. Keep in mind that some of the info. you provide may be in the report and you just looked overed it. Also, if there are sales that you're aware of but were not included in the report it will give them something to consider. With this being said, it's important to provide sales info. upfront before the appraisal is finished because if you wait until after the appraisal is completed you will need to go through the lender which can take more time.

I teach my students to always have something older, something newer, something bigger and something smaller, something better and something worse in each line of the grid. By doing so we will see what the market attributes to the value of each line. Therefore, no I am not going to use comps that are exactly like the subject as that would not let the reader know how the market reacts. Simple example, you have 2 house side by side, same street, same neighborhood. The 2 models were built the same, 3 bedrooms 2 baths etc. One has a 2 car attached garage and one has no garage. In this market you can hire a builder to build an attached garage for $15,000 How much more is the house with the garage worth all other things being equal?

Agents need to understand the appraiser's role and what constitutes a comp. They need to educate buyers and sellers - how many tell sellers what they want to hear and push buyers into deals just for a commission? Appraisers have no interest in "killing deals"; I always welcome agent input and within about 2 minutes you know al you need to know. Agents that try to BS appraisers with nonsense are quickly spotted.

As an appraiser I can tell you that when i am sent comps that came from the realtor that revied and is trying to support how they lead the sellers to a price that is not working, I will take those comps and put them in the report in the same brackets and apply the same adjustments and in most cases I will get the same or lower value. As an appraiser I review all known comps and what I put in the report are the ones I need to communicate to the knowledgeable reader how and what the adjustments were. All the information is in that report, and anyone could do that. Just selecting coms based on the highest price never works.

When dealing with a unique home or a contract price that is seemingly at jeopardy for a low appraisal, I find it more effective to get in front of the issue. Providing the appraiser with a list of upgrades or features that make the property unique while adding value is important. I also find it valuable to point out comps that help support the contract price. I work with the cross-sale agent to provide a packet to the appraiser prior to them conducting the appraisal.