How to challenge a low appraisal

Did you try to get a loan or sell a property but had appraisal problems? I hear all the time from real estate agents, home owners and investors about bad appraisals that killed their deals. What can you do about a “low” appraisal? Honestly, not much sometimes, but you can at least write a well-reasoned cordial letter to the lender to ask the appraiser to reconsider the value in the report based on support you offer in a brief letter. I’ve seen some clients have success with the points I explain in the video below when they legitimately do have a “low” appraisal. When I say “low” too, I’m not talking about a value that is lower than the sales price because we all know market value and price are not the same thing. I really have in mind an appraisal that is truly botched and plain bad. By the way, you can read a blog post about challenging low appraisals in case the video is not working for you.

I’d like to hear about your situation with a “low” appraisal and what you did about it. How did the appraisal impact your deal?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.


  1. Tom Iarossi says

    I can’t seem to catch a break with appraisers, and face a brick wall when I try to do anything about it. The worst was an appraisal on my second home a few years ago; I identified several profound factual errors that the lender wouldn’t even discuss.

    It was in a condo development, so there were lots of comps. He gave credit for features to units that those units didn’t have, such as a mountain view and a walkout basement, and denied them for my unit, which had both. When he made allowances for size differences (footage, one vs two car garage, etc.) for the inferior units, he ended up valuing them higher than mine. He misstated square feet, undercounted bathrooms, and claimed my completely finished basement was only 80% finished. I was unable to refi because of his egregious errors, and the lender (who is now history) didn’t want to hear about it.

    Then just last week our primary home, also a townhouse, was appraised for a buyer who had made an offer. The appraiser basically valued the home at the same price as it was last year despite the fact that the market here is hot (year over year prices up 10-20%), several comparable units are selling at above what we asked, and we had made numerous improvements to every part of the home. Turns out the appraiser was from another county and did not know the area. He ignored price trends and improvements completely.

    I’m beginning to wonder how competent any of them are any more.

    • says

      Tom, I’m sorry to hear how bad it’s been for you. The first appraisal really sounds like a disaster. Unfortunately it sounds like the lender does not care either. That’s terrible also. How much do you think the appraiser missed the value by on your current townhouse? Have you found out what the formal process is to appeal the apprasial yet? I’m curious to hear your plan on how to address the issue.

      If it would be helpful, feel free to use a format I created for some of my investor clients. See this post:

      • Tom Iarossi says

        I think the appraiser missed the value by at least 10%, and here’s why:

        1. Appraising strictly on square foot comps ignores improvements, condition, and the impact of shorts and foreclosures. We have many improvements the others don’t. If they’re going to appraise strictly on price-per-foot comps, a computer can do that.
        2. One of the comp units had a relatively low selling price, but the new owner is investing many thousands in basic improvements such as flooring, carpet, paint, and kitchen cabinetry.
        3. His appraisal is basically saying that my unit has not appreciated at all in a full year, when it was appraised for a refi at basically the same value he determined.
        4. He deducts too much for adjustments. Is 1-1/2 baths really worth $10,000 less than 2 full?

        The market here (San Diego) is hot. Low inventory, quickly rising prices, and we’re near the beach. Every sale in this complex in the last 9 months has been at or above our asking price, proving that the market is defining the value at least 10% above his estimate. We have our last (2011) appraisal and are challenging his conclusion on a factual basis. And hopefully getting a new appraisal. He stopped two sales with this one.

          • Tom Iarossi says


            Our realtor included all of those points and more in a very hard-hitting letter to the buyer’s lender, basically demanding a new appraisal. That lender described the appraisal as “horrible” and is ordering and paying for a new one, and taking that vendor off their list of those they use.

            Key point: The rebuttal was rich in facts from deep research, listing two dozen points of contention. Our differences were not just based on opinion; he and I collaborated to identify many points on which we thought the appraiser was factually wrong, and they agreed. The hour or two he put into this was well worth it.

            I’m still concerned about appraisals based strictly on square footage, though.

          • says

            It sounds like you handled the situation well. The appraiser should definitely be considering square footage and a number of other elements such as condition, level of upgrades, location, and more. I hope the second round goes much better for you. Why would the lender not send a local in the first place? That’s the big question. It’s nice that they’re listening to your reasoning about the market, but why did they send someone out who didn’t know the market the first time around?

          • Tom Iarossi says

            I understand that using appraisers form outside the area supposedly gives a more objective opinion. But this one was from an area not yet in recovery, and the market here is up about 10% over 2011.

            I also understand the square footage consideration, but it can’t be the only one. When the appraisal is based solely on that, which it is unless all the characteristics of all the comps are considered, it yields something an Excel spreadsheet could do.

          • says

            It would be interesting if that was the lender’s actual strategy. Usually appraisers who are local know the market better than outsiders. The objective opinion really should be based on a deep understanding and knowledge of the market. Ultimately, an appraiser can live next door to a property, but not be a good match for the appraisal though. However, it’s hard to drive a couple counties away and really be in touch with what is happening in the far-away location. Living or working close by often can help in the accuracy department, which is the goal.

            I agree with your thoughts on square footage. Thanks for the conversation.

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