Fighting Back Against Low Appraisals
Appraisals have long been the source of much frustration for home buyers, sellers and real estate investors, a situation which has only gotten worse since the housing market meltdown. The question is if there is anything you can do if a mortgage lender performs an appraisal review and comes back with a lower value, is there anything you can do to fight back?
Of course the more homework buyers, sellers and investors do upfront the less likely there is to be any issues with appraisal reviews later. Though of course this is never any guarantee you won’t find yourself at odds with the bank’s underwriting department.
Home value estimator tools like Zillow’s are exactly that ‘estimators’ which can often easily be 25-50% off. Using a seller’s appraisal is no good either and often a big waste of money for home sellers. A buyer will have to get a new appraisal completed anyway and the truth is that while almost any number can be put on an appraisal it doesn’t mean it will pass review.
If possible appraisals should be ordered through an appraisal service which also frequently provides appraisal reviews for major banks and lenders. They’ll know exactly what could be an issue with your lender before it even comes up. Plus they’ll have a lot more weight to help you fight back if there are disagreements about a home’s value. A good tool that we use is a packet that includes before and after pictures along with a list of all the upgrades or repairs that we made. This doesn’t guarantee that the home will appraise for what you hope, but it does help the appraiser to see all that has been done to the home and helps to justify the price increase you are trying to obtain.
Should a lender come back with appraisal review issues all is not lost. Well, in some cases it could be a case of the lender finding an excuse to deny the loan in which case you’ll need to shop for a loan elsewhere. However, if the value is justifiable your options include having the original appraiser provide a rebuttal and additional comparables to support their findings or ordering a second appraisal from a new appraiser. A low appraisal review may be an opportunity to ask for a price cut but it also doesn’t mean you should just give up on your transaction without a fight.
