6 Steps to Challenging a Low Home Appraisal During a Mortgage Refinance

by Matty ByloosSeptember 23, 2016

Don’t Let a Low Appraisal Ruin Your Real Estate Transaction

In any residential real estate transaction, there’s a lot riding on the home appraisal. If you’re selling a home, a low appraisal can make it difficult to get what your home is worth. If you’re purchasing and the appraisal comes in under contracted price, then you won’t be able to secure financing.

For refinancers, a sub-par appraisal can result in higher interest rates or private mortgage insurance premiums. It may even prevent the refi from going through entirely. Fortunately, you can challenge a low home appraisal. Take a deep breath, and then follow these steps.
how to challenge a low home appraisal mortgage refinance

Get a Copy of the Appraisal

Before you can dispute the appraisal, you’ll need to know why the appraiser undervalued the home. Ask your real estate agent or mortgage broker to get a copy of the appraisal for you. Reviewing it will give you useful insight into why the appraiser may have undervalued the home.

Compare and Contrast

In the appraisal, you’ll find a list of homes that the appraiser used to value the home. You may find that many of the homes on the list aren’t really comparable at all. Some may have smaller lots or lower square footage. Others may be in poor condition or lack similar amenities. You may also find that the appraiser compared your home to sold listings in nearby, but less desirable neighborhoods or school districts.

Search for Accurate Comparable

Between you and your real estate agent, you should be able to come up with a list of more comparable properties for the appraiser to use for valuation purposes. It may just be that the appraiser didn’t fully understand local market conditions or didn’t do the proper research.
how to challenge a low home appraisal mortgage refinance

Sell the Benefits

It’s possible that the appraiser missed certain details about the house during the initial evaluation. For example, he or she may not have taken note of the renovated kitchen, remodeled bathroom, or eco-friendly HVAC system. Make a checklist of as many desirable features as you can come up with, and have that ready to present to the appraiser.

Make Your Case

Before ordering a second appraisal, see if you can get the previous appraiser to reconsider their assessment. Don’t just give them your opinion; back it up with the data you’ve gathered. Who knows? They may see things your way and be willing to reassess.

Get a Second Opinion

If the previous appraiser simply won’t consider your request for a reappraisal, then you may want to consider getting a second appraisal. There are two ways to do this.

First, you may be able to demand a second appraisal from the mortgage lender. If granted, the bank will send another appraiser to tour the property. Second, you can hire your own appraiser to take a look at the home.

Try asking your lender first. If that doesn’t work and you feel strongly that the home’s value is higher than assessed, hire your own expert – it’ll come out of your pocket, but it could turn a stalled real estate transaction into a success.

Good Luck!

Whether you’re buying, selling, or refinancing a home, we wish you the best of luck in getting the appraisal you need to get the deal done. Oh, and if you’re currently looking for a home to buy or would like to sell your home, we’re here for you. We’re Homes.com, and we’d love to be a part of your story.

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About The Author
Matty Byloos
Matty is the Content Marketing Specialist for Homes.com. He's a newly minted homeowner who currently lives in Portland, Oregon with his wife. When he's not working, he enjoys writing fiction, working on the house, and enjoying the amazing nature that the city has to offer. He is also the founder of NOVEL Creative Agency.

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