Tips for challenging a low appraisal

I cannot tell you how often I get phone calls from local real estate agents about bad appraisals on properties they are trying to sell. Usually the complaint is the appraisal has come in lower than the sales price. Of course we all know market value and contract price are not always the same, right? But very often in these situations there is a legitimate complaint because the appraisal just doesn’t seem to be well-supported. In cases like this I recommend the following points for preparing a solid appraisal rebuttal or reconsideration of value:

  1. Put it in writing: Don’t just say things like, “this appraisal is bad”. That does nothing to provide support for why you think the appraisal is not adequate, and it does nothing to propel the conversation forward. Don’t just make a phone call either. It’s better to put your thoughts on paper in a logical manner so the lender and appraiser can digest your well-reasoned argument.
  2. Be specific: Provide specific support for why the value opinion is different in your mind. It does nothing to only say “value should be higher”. Pick apart the comps in the report and any other properties you think are truly comparable too. Maybe you know the neighborhood really well, so you could point out something the appraiser really missed that impacts value. For example, you might say, “Comp 1 has zero upgrades and backs to a commercial property, yet the appraiser considered this property equal to the subject and did not make an adjustment. Why was no adjustment made?” Or maybe you’d say, “Comps 1-3 were all short sales and sold within 10 days of being listed. These sales appear to have sold quickly and below market value. Why was no adjustment given in the report for the distressed nature of the sales?” You might consider mentioning important information about neighborhood boundaries if inappropriate comparables were selected. Make sure to include marketing information on the subject property too (how many offers did you have?) as well as a list of all upgrades and costs too. Lastly, are there any big differences between the reported square footage or bed/bath count in the appraisal report in comparison to what you know to be accurate about the subject property?
  3. No pressure: Remember not to pressure for a higher value. Just stick with the facts in the marketplace as they relate to the value of the subject property. As much as possible, try to illuminate the market so it can speak for itself. You are asking the appraiser to reconsider the value, not meet your sales price.
  4. Be humble: You might be right, but you could also be wrong. There may be a very good reason why the appraiser made a certain adjustment. If the appraiser got it right too, then let the appraisal stick. There is no sense in trying to fight something if you don’t really have a case.
  5. The big picture: Focus on big picture items that impact value like proper comp selection and proper adjustments in the report. It probably doesn’t alter value if the appraiser made a spelling error, right? Put your energy into things that really matter.
  6. Bullet points: Be systematic in your presentation. Don’t write a novel, but organize your thoughts into 5-10 specific bullet points so the appraiser and lender can easily digest your reasoning. Avoid lengthy paragraphs and emotional points void of logic and specific data.
  7. Be professional: Be nice even if you don’t feel like it. The way you ommunicate reflects upon you and your company.
  8. Ask pointed questions: This goes back to being specific. Ask the appraiser to explain why certain adjustments were made or not made. Try to understand the report and ask the appraiser to explain himself.
  9. Opening Paragraph: Include something like the following at the beginning of your letterhead: “After reviewing the appraisal for [address] by [appraiser], we would like to request further clarification and investigation by the appraiser. We would like to ask for a reconsideration of value based on the following points:”
  10. Closing Paragraph: “All things considered, we would humbly ask the appraiser to take a second look at the information above as it relates to data and adjustments in the appraisal report. The information above may impact the overall value of the subject property. We appreciate your time and consideration, and we can be reached with any further questions at 916-xxx-xxxx. Respectfully,”

Let me know if you have any questions or need my assistance for a property you are working on. I cannot be an advocate for you, but I can provide you with market insight or a second opinion of value.

Have you experienced any success with appraisal rebuttals? Any tips to share?

UPDATE: I wrote a helpful piece on about how to challenge a low appraisal. I included a downloadable format to use. It incorporates the content above, but includes the updated document. It’s free. Go get it HERE.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.


  1. Ak says


    We are buying a home in AZ. The home was appraised for the same amount as the listed price but 400 sq feet lower. We feel the home should be appraised much lower and have requested the lender for a rebuttal.

    How long do rebuttals usually take?


    • says

      I’m not quite sure what you mean, though it sounds like you’re saying that the home appraised at the list price still despite being 400 square feet smaller than what the builder says. Is that correct? A time table all depends on how long the lender gives the appraiser. Typically something like that should not take more than a matter of days or a week (if there is a formal review appraisal ordered where another appraiser gives an appraisal). Questions to consider: If the builder was off on the subject property, are other comps by the same builder also off in square footage? Would that justify the price still since other comps are off too?

  2. Nancy says

    I think real estate appraisers ought to have to defend their low appraisals in front of a tax appraisal committee. There is something inherently wrong in the appraisal district establishing one value and an appraiser another. An appraiser ruined a refinance deal for me and he ought to have to answer for that.

  3. Misty says

    Hi Ryan.

    We just got an appraisal back for a 100% custom new home build that was about $20K under the build price. In the last few years, this has not happened with any of this builder’s homes. All homes he has built have appraised for slightly over the build price. He has told us this as well as two different lenders he has worked with.

    We’ve looked over the appraisal in detail and while there are some less significant things (like not accounting for a covered patio etc), we believe the #1 reason it came in under is b/c he is comparing our 100% custom home to “tract” homes built from pre-designed plans with far less custom features. We designed the floorplan and hand picked EVERYTHING in the house. Nothing was bought as a “package.” It is a much higher quality home. Many of the “custom” things have huge functional value.

    In your opinion, is this a valid reason to challenge the appraisal? We have spoken to / emailed the appraiser (using many of your tips) and he has refused to budge on comps or adjustment values. Is it worth getting a 2nd appraisal? Do we have any other options?

    Thank you in advance for anytime you have to respond to this.

    • says

      Hi Misty-

      Thanks for the comment. Here are a few thoughts.

      1. It’s hard to say if you have a strong case for challenging the appraisal. There is a first time for everything. Just because a builder has never experienced a low appraisal before (which is a bit surprising really), does not mean this situation is truly something to be concerned about.

      2. Custom should be compared to custom if there are custom comps available. One of the most significant adjustments too is usually a brand new property vs. older sales. There is almost always a positive reaction in the market for new vs. old. I’d be curious to hear if the appraiser made an age adjustment in the report or if the comparisons were all to brand new tract homes.

      3. Is there a positive reaction in the market to the features you chose or did the appraiser maybe consider that your house was overbuilt? I just wanted to point out that sometimes extras like really expensive towel racks and $3,000 faucets don’t always translate into strong value in the resale market.

      4. It’s really hard to say if you have a strong case or if you would even have success. Without knowing your market or doing a formal review, it’s not easy to make that call. If you do feel the comparisons are not adequate and are indeed the reason why the appraisal came in low, then it would be wise to at least put together some thoughts to see what the appraiser says. After all, the appraisal really comes down to comp selection and adjustments. On that note, if you have better comparisons, by all means show the sales. It’s important to provide any specific rationale (data and comps) for why your property is indeed worth more. Does the builder have suggested sales? Or better yet, are there sales within the subdivision that have closed at a similar level? (if this is a subdivision of custom homes).

      If it’s useful for you, I actually have an updated “challenge” format. I wrote an article on an investor website called BiggerPockets recently and there is a free download of the format there too.

      Best wishes. I hope this is making sense. I’m up early to work, so it’s always hard to gauge if I’m coherent yet at 4:00am. 🙂

      • says

        Wow Ryan. I’m so impressed you responded so quickly and thoroughly. Thank you.

        There are custom comps available, and they’ve sold for $15-$30K more than the comps he chose. We got a list from our realtor and gave them to him. He refused to use them saying the homes he used were comparable. Yet, we’ve been IN them and know the owners / builder who built them. They are nice tract homes, but not custom.

        Of the 6 comps he used, 4 were listed as age “0” one at 2 years and one at 9 years. There was no adjustment given on that line, however, those two homes were listed as “C2” instead of “C1” and a 10K adjustment was give on both.

        I don’t believe we “overbuilt” our house. Our towel racks were average, our plumbing fixtures upgraded, but not to any crazy level. In fact, for most everything in the house, I shopped around and saved a significant amount. For example, I save over $3500 by purchasing the EXACT same plumbing fixtures online instead of from the plummer. We saved $5000 on appliances by getting them at Lowes instead of the builder’s suggested contractor. So, in reality, for most people, our build would have cost them even more than it is costing us.

        Most of the things we talked to the appraiser about were functional upgrades. An extra water heater, custom designed highly functional closets and cabinet interiors, 2×6 exterior framing, highly upgraded insulation, upgraded furnace, laundry chute, extra water heater, custom designed highly functional (well planned) floorplan, etc. These are things that DO NOT exist in the comps he chose and we believe increase the market value of the home.

        There are also cosmetic upgrades ($1000 in batten board, vaulted ceiling, tile surround on shower (at $2 a sq ft), granite countertops etc) but we did not mention those to him. Many of those things exist in the comps he chose.

        There are other homes from this builder that have closed at a similar level (within $10-$20K, most higher than ours). However, they are all 2 stories and ours is a rambler so he refused to look at them. This list of homes is different than the comps we offered which were ramblers, but from different builders and about 2 miles away instead of down the street.

        A few other things that we thought could help, but he told us absolutely not:

        We have a HUGE 2 car garage. It is not quite 2 cars, but it is very close with a man door. No adjustment was given for this.

        Our large patio is covered (extension of roof from home), all other comps were not covered, no adjustment was given.

        Our home is highly energy efficient (in our opinion…2×6 walls, insulation upgraded as high as it could be, upgraded furnace), yet no credit was given. He wrote “assumed typical for type”

        He listed some comps as “some upgrades” and ours as “many upgrades” but no adjustment was given.

        Our lot sizes is about 2000 sq ft larger than any other comp he used, but no adjustment was given

        The house is still about 3 weeks from being finished. He was not able to see flooring, paint, cabinets, countertops etc. He left off random appliances such as a fridge, dishwasher, microwave.

        And if I’m monopolizing your time, you can tell me that! I just feel exactly like you describe in the first paragraph here:

        and have no idea what to do. He has told us flat out that he will not budge and never adjusts his appraisals. We cannot believe we are facing this.

        Any tips for working with the lender at this point would be appreciated. They have said they rarely accept 2nd appraisals, but we simply do not have 20K in addition to our down payment.

        If you do choose to answer me again, THANK YOU in advance!

        • says

          Wow, what a wild situation. I’m so sorry to hear about this, and I know it’s not an easy scenario to be in. It sounds like you have very limited options with the appraiser because the appraiser has already said, “I will not budge.” That’s very clear, so you may want to talk with the lender about the situation. Ask them what your options are and what they will do for you. Can you order an independent private appraisal for them to review? Can the lender do a full interior inspection field review? (as opposed to just an exterior inspection). If the lender will not work with you, it may be possible that you have to go with a different lender. Or the builder can maybe work something out with the current appraisal. What if the builder lowered the price or met you half way somehow? If the builder doesn’t have a back-up offer, it may be worth it to them to eat some of the expected profit to make the deal work. You can also ask your loan officer to figure something out with the current lender or offer you workable scenarios to deal with this situation.

          Regarding comparison to a 2-story for a 1-story, it’s definitely not ideal. I can see why the appraiser made that choice. However, sometimes the best comps are a bit different. One thing to consider too is that 1-story houses are often more expensive to build on a price per square foot basis than 2-story homes. I find in my market that 1-story homes at the same size as a 2-story usually sell for more. That’s my market though, and it may be completely different in your market area.

          I hope it all pans out. Let me know if you have any questions.

      • says

        So, we paid to have a field review done. That appraiser put the value 18K higher than the original appraiser. He also tore apart the original appraisal which had quite a few clerical errors in it (listed the kitchen as fully function when it had no cabinets, appliances etc, listed a fireplace when there was none). We sent that to the underwriter who sent that to some board that just sent it back to the original appraiser who said (of course) that his appraisal was fine and took off and additional 5K for the fireplace mistake. So, now we are an additional 5K under. Seems like there should be some additional recourse to protect homebuyers from extremely low appraisals. There is NOTHING we can do. The builder won’t lower his price b/c he sees it as a nutty appraisal and he can get a new one if he has a new buyer. We have to walk away from our home b/c we don’t have an additional $25K on top of our downpayment and closing costs. We don’t want to change lenders to get a new appraisal b/c our interest rate is locked and would go up .75% with no guarantee of a better appraisal (though that seems quite likely at this point). I’m sick. Do appraiser get the kind of power they have over people’s lives? I now have to tell my kids we can’t move into the home they’ve watched us build and put their handprints on the patio and picked paint colors for….SEems like their ought to be SOMETHING we can do.

        • says

          Misty, I am so sorry to hear this. Is there anything your lender can do for you? What does your loan officer say can be done? If the appraisal looks shoddy, the lender should be able to sniff that out and then hire another appraiser from their panel. It’s a silly lender regulation to allow a bad appraisal to dictate the course of their business. If that is not possible, it sounds like all resources with your current lender have been exhausted. I can understand you feeling very apprehensive (to say the least) about starting the process again in light of all the money it costs and would cost with a higher rate too. I’m sorry to hear about this.

          • says

            The lender / underwriter thinks the appraisal is shoddy, that is why they sent in the appeal. But the appeal was ridiculous. All the “board” did was take it back to the original appraiser. In my opinion the appeal should be completely independent of the original appraiser. The lender says they can’t legally through out the appraisal unless the appeal board approves it. So now all three of us (lender, builder, homeowner) are stuck using an appraisal we don’t like.

  4. says

    Unfortunately it sounds like the lender’s hands are tied, which is an indication of the weakness of strict lending guidelines. It’s understandable why they are in place, but it’s too bad in instances like this regulations trump reason. Would it change anything if you switched to an FHA loan?

      • says

        No worries at all. That’s one of the reasons why I have a blog. I want to help provide good information. As an FYI, the FHA appraisal will require an appraisal from an FHA-approved appraiser. It’s a whole different ballgame, so the conventional appraisal won’t be used. However, the only issue is how your lender will feel about having a low conventional appraisal on file. That’s the big issue probably.

  5. says

    I stopped by to pick up some tips for challenging appraisals and ran across the above post. Quite a novel! I wish her luck and you are quite generous with your time and knowledge.

    • says

      Thanks for stopping by Wayne. I appreciate you stopping by. I began to see some blog traffic from the Portland Association of Realtors today, so I knew they’d posted my article. That’s an honor. For the record, my family really loved Oregon as we visited Bend, Crater Lake and Portland last summer. Wow.

      It’s a difficult situation she finds herself in. I hope a remedy can be found.

      Take care Wayne.

  6. Lara says

    We are waiting on our appraisal but they keep requesting comps from our sales agents/lender. This is sparking ideas that it may not appraise and we want to be ready for a reconsideration of value. We do not have faith in our sales agent to help with this at this point. Is there anything we can do? Comps in the neighboring town 4 miles away are much higher. Can we use that? We are so confused on why one house will appraise higher than comps and why if our house is better and only a little higher than that house why it wouldn’t appraise.

    • says

      Hi Lara. It’s hard to say what’s going on here. When an appraiser does ask for sales, listings, data, etc… from the agent though, that is probably a sign the appraiser is not seeing the value at the same level the property may be in contract for. When I do an appraisal for lending purposes and the contract price looks really high, I want to see how the agent came up with the price. Either I’m missing something about the market or maybe the price is just high. I am always baffled when agents do not respond, though sometimes they don’t respond because there is nothing out there to support a value that high. I’m sure there are other reasons agents don’t respond too (including being busy), but I do believe it’s a great opportunity to serve the home owner.

      A few things:

      1) An article on how to choose comps: I thought this might help provide you a little context. I don’t know your area, though if you yourself say the sales are higher, maybe that area sells for more? If there is a really good reason for the appraiser to use further sales, they can be used, but still the appraiser might have to make a value adjustment because one location is better than the other. Frankly, I would ask the agent to please provide sales. If that is not something the agent is willing to do, ask why and understand the process. There could be more to the story here.

      2) It’s hard to say in your situation why one house would “appraise” and another one not. Ultimately a couple of basic questions appraisers will ask are: What have similar homes sold for? What are similar homes selling for? What has the market done since the most recent sales? The answers to these questions help an appraiser reconcile the value. Agents and owners (including myself as an owner) tend to want a high value. But it’s not realistic to always have a value that is higher than the most recent sales unless the market is increasing in value of course. This is where we need to realize value has to be supported by something. Where is the support? I hope your agent can help pull back the curtain to show the appraiser support.

      Best wishes.

  7. Derek says

    Another great article Ryan! I see tips for when the appraisal comes in low, but what about for appraisal conditions? Is there an option to challenge a condition like an appraiser calling for a new roof when a 2 year cert has been issued, or things like cracks in concrete?

    • says

      Hi Derek. Thanks so much for the comment. An appraiser can certainly change his/her mind about repairs required based on new information, so I would recommend reaching out through the lender and having the lender ask if it would be prudent to value the property in light of a 2-year roof cert instead of the roof needing to be replaced. If this is an FHA deal, a 2-year roof cert may help the appraiser back off requiring a new roof. However, if there are stains all over the ceiling despite the existence of a 2-year roof cert, then the appraiser may be right to require replacement since sometimes a 2-year roof cert is bogus (truth).

      For any condition though, I think it’s prudent to have the lender reach out and ask the appraiser for clarification as sometimes it’s possible to look at the issue in different ways. After all, sometimes repairs are required that really aren’t in line with the Fannie Mae Handbook, HUD, etc…, so it’s good for an appraiser to re-visit what was required in the original report. However, there are times buyers and agents simply need to take care of a problem because the appraiser has been nothing but prudent (and correct) about calling for the repairs. In an ideal world the lender can reach out and provide the appraiser with new information on repairs (such as a 2-year roof cert, cost-to-cure for wood decay, structural cert from an engineer to say cracks are okay….) and then it’s okay for the appraiser to consider the new information. The appraiser might be able to change the condition in the report or put together a 1004D report to say the item has been cleared.

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