Avoid Low Home Appraisals with These 5 Tips

Home appraisals are a necessary part of buying, selling, or refinancing a home. In a purchase, an appraisal confirms whether the contract price is appropriate—protecting the buyer from overpaying and reassuring the lender that the home is worth the loan amount in case of default. In a refinance, the appraisal is critical for both qualification and pricing. So when a valuation comes in lower than expected, it can be a real shock—and a low appraisal can jeopardize a new loan or a refinance.

What Causes Low Home Appraisals?

The good news is that low home appraisals aren't common. According to Fannie Mae, appraisals come in below the contract price only about 8% of the time. When they do, the most common reasons include:

• Declining or rising market values

• Overpricing by the seller

• Foreclosures or short sales in the neighborhood

• Artificially inflated prices

• An inexperienced appraiser

More than anything, the market and the appraiser's local knowledge drive the valuation. Most of the time the number is out of the hands of the seller, buyer, or lender—shaped instead by fluctuating market trends and outside influences.

How to Get the Highest Valuation

As a seller or someone refinancing, there are a few things you can do to put your property in the best light. Your lender has likely done its due diligence in selecting an appraiser, since a lot is at stake for them in the value of the collateral—so you may have little say in who conducts the appraisal. You can, however, request an appraiser familiar with the area where the property is located.

When the appraiser arrives, provide copies of the comparables used to set the listing price, along with information (and even receipts) for any major improvements or renovations. Finally, make sure the home is clean, tidy, and well-maintained. These small steps can make a real difference.

What to Do If Your Appraisal Comes in Low

If a low appraisal does happen, there's no need to panic—you have several options:

• Review the Appraisal Report for Errors: Obtain a copy and review it in detail, looking for issues that could lower the valuation, such as an incorrect number of bedrooms or bathrooms.

• Check the Comparable Sales: The report lists the comps the appraiser used. Make sure those recent sales are truly comparable to your property.

• Look Into the School Districts: Homes in stronger school districts tend to be priced higher. Confirm the comparables share the same school district as your home.

• Consider Appealing the Appraisal: After reviewing the report and gathering supporting documentation, present it to the appraiser and ask them to reconsider.

• Get a Second Appraisal: If the appraiser won't revise the valuation, a second opinion may be worthwhile—but only if you truly believe the original appraisal is grossly incorrect.

If you need an appraisal, look no further. Our team of experienced, trustworthy appraisers delivers a detailed report quickly and efficiently. Contact Appraisals Unlimited today to get started, or order an appraisal online!