With home prices dropping around the country, more and more appraisals are coming in low, and it’s affecting the entire real estate industry.
What Can You Do About A Low Appraisal When Selling Your Home?
In order to dispute an appraisal, you have to have proof for your argument. This is where an experienced REALTOR can make or break your deal. When you get a low appraisal, you have a few options to deal with it.
Option 1:
First you need to have your agent determine if the appraisals comps are legitimate. Have your agent review the appraisal and determine if the homes the appraiser used were a good representation of your market area. If your agent thinks the appraisal is solid, then you can’t really do anything but lower your price or let the deal fall apart and not sell your home.
Option 2:
Second, you can get your own independent appraisal. If, when your agent reviews the first appraisal, they determine there are discrepancies, you can get your own appraisal and send in a dispute claim to the lender.
Usually the bank will review your appraisal and ask the previous appraiser if they agree or disagree with the newly submitted one.
If the first appraiser disputes your appraisal, the bank may request a third appraisal done by another appraiser, or they may just reject your appraisal.
If the first appraiser agrees with the disputes you present, they may adjust their original appraisal and you may get a better price.
All of these scenarios are dependent on the lender. If the lender refuses your disputes, then you’re pretty much screwed.
Just so you know, if you refuse to sell your home after the lender has decided to accept the low appraisal, if the appraisal was FHA, it will be in the system on your home for the next 6 months. Which means, even if you get a new buyer for your home, you will still have to deal with that low appraisal.
Option 3:
If your agent determines that the appraisal has discrepancies; whether they are low value comps, out of area listings, or they find better comps, you can dispute the appraisal itself.
The key to a successful dispute is data. You will need as much data you can get to backup your dispute. Have your agent gather new comps they believe are closer to your home and have them submit a lot of pictures of the property.
It’s also a good idea to tell the lender how long you were on the market. If it was a short amount of time, it can help your cause. If you received multiple offers, let them know, multiple offers are a good sign that the value your home was listed for was correct.
You can also have your agent call the listing agents of other homes in your price range that are under contract. The listing agent doesn’t have to supply the price they are under contract for, but they will usually help you out considering your home sale could effect their appraisal also.
If none of these options work to get the low appraisal higher, then you may just have to bite the bullet and drop your price. If you don’t, the buyer can walk based on their contingency clause, and you never know in this market when the next buyer will come along.
Besides, if the appraisal shows your homes value is lower, you probably won’t be able to sell it at your higher price until market prices start to rise again. If you can wait until then, you may just have to take your home off the market.
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Can’t you hold the appraiser liable if they used comps that were 1500-2000 square feet smaller, in an undesirable part of the area, smaller houses that were pulled from the market (before the appraisal), and refused to include homes of similar size, recently sold, and 2 blocks away? Additionally, the appraiser spent 15 minutes total time looking at the house. How is this legal?