• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Sacramento Appraisal Blog | Real Estate Appraiser

Real estate appraisals for divorce, estate settlement, loans, property tax appeal, pre-listing and more. We cover Sacramento, Placer and Yolo County. We're professional, courteous and timely.

  • About
  • Appraisals
  • Order
  • Ask Ryan
  • Areas
  • Classes
  • Press
  • Trends
  • Share
  • Contact

How to challenge a low appraisal

Reasons why an appraiser should change the value in the report

August 26, 2013 By Ryan Lundquist 2 Comments

Once an appraisal report has been completed, can an appraiser changed the value if asked to take another look at the file? Yes, the appraiser CAN change the value if a mistake or series of errors led to a botched valuation. It seems reasonable and ethical for the appraiser to go back and fix those mistakes, right?

can the appraiser change the value - by sacramento appraisal blog

Reason why an appraiser should change the value:
1. The appraiser’s value is not accurate because of something the appraiser did or did not do.

Reasons why an appraiser should NOT change the value:
1. Someone is unhappy about the value and expected something different.
2. The promise of money or more business if the value is changed.
3. Threats of losing business, lawsuits or bad reviews.
4. A sale, refinance or bankruptcy, etc… might not go through because the value didn’t “hit the number”.

But will appraisers change the value? While most if not all appraisers will fix obvious spelling or grammatical errors, many appraisers will not go back and amend the value because of pride, fear of increasing liability (it likely makes it easier to sue if there are two different reports, right?) or a general principle that once a report is done, it’s done.

No Pity Parties: I’m not looking for a group hug session or pity for the appraisal industry – especially if you are in the middle of an experience with a bad appraisal. However, let me remind everyone that appraisers are humans. They make mistakes just like everyone does. This means there will be times when an appraiser has to correct a report because of a mistake. Maybe the appraiser forgot to make an adjustment that he meant to make, missed something important about a comparable property, measured the house inaccurately or was not aware of information at the time that could actually have made a big difference in the final value. Keep in mind of course these are mistakes, and there is a huge difference between basic errors and incompetence.

conversation with the appraiser by sacramento appraisal blog - Image purchased and used with permission from 123rtf dot com - by Sacramento Appraisal Blog smallMy Advice? If you find yourself in a situation where the appraisal seems inaccurate, reach out to open up discussion with the appraiser. If the appraisal is for a loan, talk to the lender to formally challenge the appraisal (click the link to view a format to use), but if the appraisal is for estate settlement, divorce or any other private purpose, reach out to the appraiser directly to have conversation. After reviewing the appraisal, I suggest sending an email first so you can articulate yourself clearly and give the appraiser some space to consider your information (as opposed to asking for an immediate answer over the phone). Bring up your points in a non-combative way to help the appraiser understand where you are coming from. If you have valid points, hopefully the appraiser will listen to you and consider if your information does indeed impact value (it may or may not).

Any questions, stories or thoughts to share? Comment below.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

Share:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)

Filed Under: Appraisal Stuff, Resources Tagged With: challenge low appraisal, changing value in appraisal report, How to challenge a low appraisal, how to talk to appraisers, is it okay to change value, reasons not to change the value

Top items to review in an appraisal report: Part 2

July 9, 2013 By Ryan Lundquist 1 Comment

Let’s go for Round 2 of what to look for in an appraisal report. Rather than only checking out the bottom line value, how do you know if the appraisal is solid or not? Last week I talked about looking at the neighborhood boundaries and market trends, and now let’s consider big-ticket issues like square footage, comp selection and adjustments.

1) Square Footage & Bed/Bath Count: Make sure to always look at the living area and bed/bath count in the appraisal report. Is it consistent with what you know to be true of the property or what public records says (assuming official records are correct of course)? If not, you definitely need to call attention to this difference because inaccurate measurements or missing bedrooms or bathrooms can impact value. Sometimes of course there is a reason why public records are different from what an appraiser measures. Also, remember that detached units are not added to the square footage of the main house (though they can be a part of the value still).

square footage on appraisal example

2) Comp Selection: This is one of the most important aspects of the appraisal. Whenever I teach classes about challenging low appraisals, I always recommend giving the most attention to comparable sales used in the report rather than misspelled words or minor clerical errors. A good “comp” or comparable sale is one that a buyer would consider as a replacement for the subject property. If the “comp” was still on the market, would a buyer also be interested in that property? Ultimately a competitive sale (comp) should probably have a somewhat similar location, size, level of upgrades and even bed/bath count. After all, what does a custom 3000 square foot home have in common with a 1000 square foot standard home? Not much, so they probably shouldn’t be compared. Of course there are almost always differences that require some sort of adjustment, so expect to see some. If there really aren’t any comps, it can be tricky, but this is what I do in my reports.

what makes a good comp - by Sacramento Appraisal Blog

Case-in-point: A real estate agent called me last week and told me the appraiser chose a “comp” that sold around $200,000 and proceeded to give $120,000 worth of adjustments to this property to help justify the final value at $320,000. How competitive is a $200,000 house to a $320,000 house? Would a buyer be shopping for these houses at the same time? Probably not.

3) Adjustments: Do the adjustments in the appraisal report seem legitimate to you? Do they appear to be indicative of the way buyers behave? Do the adjustments make sense when you compare all the sales used in the appraisal report? The adjustments are supposed to be based on the amount buyers would pay for the difference (not the cost of the difference). For instance, if you see Comp 1 is 200 square feet smaller than the subject property, and the appraiser gave a positive adjustment of $10,000 to Comp 1, this means buyers are willing to pay $10,000 more for a house that is 200 square feet larger. You’ll have to look at other sales in the report (or market) to see if this adjustment makes sense or not. Another example would be if your property is remodeled throughout, but the appraiser gave a minor $10,000 adjustment for the upgrades. You might need to find a property in the neighborhood that has a similar level of updates so you can help show how much the market really pays for such features (probably more than $10,000).

reviewing appraisal report tips - by Sacramento Appraisal Blog

Next week I’ll wrap up this series with a few more items to focus on. As I said before, I will post an example report at that time so you can download it and know exactly where to find these items when reviewing an appraisal. In the mean time, make sure to subscribe by email to get all posts delivered to your inbox (2-3 posts per week). I hope this has been helpful so far.

Any questions or insight? Feel free to comment below.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

Share:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)

Filed Under: Appraisal Stuff, Resources Tagged With: choosing the right comps, Home Appraiser, House Appraiser, how do appraisers come up with adjustments, How to challenge a low appraisal, how to review an appraisal report, low appraisal, quality appraisal reports, sacramento appraisers, square footage in an appraisal, things to look for when reviewing appraisal report, what is a comp

Top items to review in an appraisal report: Part 1

July 1, 2013 By Ryan Lundquist 10 Comments

Let’s be honest. If you are in the real estate industry and you regularly come across appraisal reports, do you really read them? If you’re like most people, you simply look at the bottom line value in the report and then call it a day so long as the numbers work. While that makes sense to a certain extent, why not learn how to quickly scan an appraisal to look for quality? This can help you and your clients know that the value is solid, but also help you challenge a bad appraisal too.

Image purchased at 123rf dot com and used with permission - 14688774_s - smallerOver the next few weeks we’ll be looking at top items to review in an appraisal report. I’ve split this into several posts so it’s easier to digest, and at the end I’ll include one example report with all of these items highlighted. In the mean time, you can subscribe by email to get future posts delivered to your inbox.

Let’s hit on three areas of that are located on the very first page of the report:

1. One Unit Housing Trends: This is a section on Fannie Mae’s appraisal report on the first page of the report. It gives the appraiser the opportunity to characterize the direction of property value in the neighborhood, the amount of housing supply on the market and how long it takes properties to sell. If a different form was used for a non-lending appraisal, the appraiser should still comment on these items, but there is no little box to check, so you’ll need to scan the report to find where the appraiser might have discussed the market.

carmichael increasing or decreasing - example found on an appraisal a client sent to me in May 2013

Why does this matter? If this section is not filled out correctly, the appraiser might not understand the market. As an example, consider the box above in Carmichael, which is a census-designated place in the Sacramento area. Values have been increasing, there is an undersupply of listings and properties are selling in very short periods of time, yet this report stated values were stable, supply was balanced and it is taking 3-6 months to market properties (all not accurate). If the fundamentals of the market are clearly incorrect, maybe other things like comp selection and adjustments are also inaccurate.

2. Neighborhood Boundaries: It’s so important to know exactly where one neighborhood ends and another begins. Misunderstanding neighborhood boundaries can have a dramatic impact on perceived property value.

neighborhood boundaries in an appraisal report

The Fannie Mae appraisal report form is used for most lender appraisals, and it asks the appraiser to identify the neighborhood boundaries on the first page of the appraisal report. The section looks just like the box above.

neighborhood boundaries in an appraisal report example by sacramento appraisal blog

The example above is perfect in that there is a huge difference in value between West Tahoe Park and the portion of Oak Park that is just west of this area. Stockton Blvd acts as a “line of demarcation” in this market, so “comps” really shouldn’t be borrowed across the street since these are two distinct markets. Even more striking is the “Med Center” boundaries outlined in red. There is a huge value difference between properties located inside and outside the Med Center boundaries.

3. Market Conditions: The Fannie Mae report asks the appraiser to discuss the conditions of the neighborhood real estate market and give support for the direction of property values, marketing time and inventory levels.

market conditions in appraisal report

In many cases this section of the appraisal report in a bad appraisal will include very limited information that is basically text that is transferred from one appraisal to another. Ultimately if this portion of the report includes erroneous information, we’ll have to wonder if comp selection and adjustments are going to be bad also.

market description for Elk Grove May 2013 - by Sacramento Appraisal BlogThis section is often far too thin in shoddy appraisal reports, but it is actually very important because it should give the reader an idea of the trends in the neighborhood. On a side note, I have been giving great attention to describing the market in my reports, especially since values have been increasing rapidly in some areas. In future years when loans go into default, and the lender is looking for somebody to sue, I want them to see that I gave a detailed description of the volatility of the market. If put on the stand in court, I will at least be able to say, “Did you read the appraisal report?” or “Did you read the section where I talked about rapid appreciation being unsustainable?” Click on the thumbnail for a recent example during an Elk Grove appraisal.

Any questions or insight? Feel free to comment below.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

Share:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)

Filed Under: Appraisal Stuff, Market Trends, Resources Tagged With: appraiser blogs, Fannie Mae appraisal report, Home Appraiser, House Appraiser, How to challenge a low appraisal, how to review an appraisal report, market trends in appraisal report, Real Estate Appraiser in Sacramento, sacramento appraisers, what to read in an appraisal report

How to challenge a low appraisal (a format to use)

June 5, 2012 By Ryan Lundquist 6 Comments

How do you go about challenging a low appraisal? While you might feel frustrated beyond belief, it’s important to not make an emotional argument, but rather share facts and market data in a systematic way to support your case. The following document is a format I developed for my investor clients who kept asking me what they can do to deal with bad appraisals.

Before launching into a rebuttal, you first ought to make sure to ask the lender what their process is for challening an appraisal so you know you are spending your time wisely. Additionally, read through some of my tips for challening a low appraisal.

Check out the document below or VIEW OR DOWNLOAD HERE. Feel free to use or adapt according to your needs. If you need a Word document of this file, contact me.

View this document on Scribd

I hope this is helpful. Let me know if you have any questions.

UPDATE: I wrote a helpful piece on BiggerPockets.com about how to challenge a low appraisal. I included a downloadable format to use that evolves the format above just a bit. It’s free. Go get it HERE.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

Share:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)

Filed Under: Appraisal Stuff, Resources Tagged With: appraisal reconsideration letter, appraiser in Sacramento, bad appraisal, dealing with low value, format for putting together appraisal rebuttal, House Appraiser, How to challenge a low appraisal, how to do appraisal rebuttal, low appraised value, reconsideration of value, Sacramento Home Appraiser

  • Go to page 1
  • Go to page 2
  • Go to Next Page »

Primary Sidebar

Connect with Ryan

 Facebook Twitter LinkedIn YouTube Instagram

Subscribe to Weekly Post

* indicates required

Search this site

Blog Categories

  • Appraisal Stuff (407)
  • Bankruptcy (3)
  • Divorce (4)
  • Estate Settlement (6)
  • FHA Appraisal Articles (56)
  • Internet (53)
  • Market Trends (481)
  • Photos from the Field (126)
  • Property Taxes (70)
  • Random Stuff (231)
  • Resources (566)
  • Videos (161)

Blog Archives: 2009 – 2021

Lundquist Appraisal Links

  • Appraisal Order Form
  • Appraisal Website
  • Rancho Cordova Appraiser Website
  • Sacramento Appraisal Blog Sitemap
  • Sacramento Real Estate Appraiser Facebook Page
  • Twitter: Sacramento Appraiser (@SacAppraiser)
  • YouTube: Sacramento Appraiser Channel

Most Recent Posts

  • How long can this market keep going?
  • What is your housing persona?
  • Rapid price growth & the Gilmore Girls next door
  • Are first-time buyers targeting 2-4 unit properties?
  • Stale real estate headlines & buyers flocking to El Dorado County
  • My new sewer line adds huge value, right?
  • The housing market nobody predicted
  • Real estate trends to watch in 2021
  • You carried me & a spreadsheet for Christmas
  • Real estate drama (and a market update)

Disclaimer

First off, thank you for being here. Now let's get into the fine print. The material and information contained on this website is the copyrighted property of Ryan Lundquist and Lundquist Appraisal Company. Content on this website may not be reproduced or republished without prior written permission from Ryan Lundquist.

Please see my Sharing Policy on the navigation bar if you are interested in sharing portions of any content on this blog.

The information on this website is meant entirely for educational purposes and is not intended in any way to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or any other potential real estate or non-real estate purpose. The material found on this website is meant for casual reading only and is not intended for use in a court of law or any other legal use. Ryan will not appear in court in any capacity based on any information posted here. For more detailed market analysis to be used for an appraisal report or any appraisal-related purpose or valuation consulting, please contact Ryan at 916-595-3735 for more information.

There are no affiliate links on this blog, but there are three advertisements. Please do your homework before doing business with any advertisers as advertisements are not affiliated with this blog in any way. Two ads are located on the sidebar and one is at the bottom of each post. The ads earn a minor amount of revenue and are a simple reward for providing consistent original content to readers. If you think the ads interfere with your blog experience or the integrity of the blog somehow, let me know. I'm always open to feedback. Thank you again for being here.

Copyright © 2021 Sacramento Appraisal Blog