9 Steps to Disputing a Low Home Appraisal

Know your homeowners' rights when it comes to appraisals.

When you are refinancing or selling a home, a lender will want an appraisal to assess the property’s worth and ensure collateral value. “That means, in most cases, it must appraise for at least the amount of the loan,” said Than Merrill, real estate investor and founder of FortuneBuilders, a real estate investment education company.

Because appraisers take so many factors into account, their appraisals can often be low, which Merrill said typically results in either the buyer walking away or the lender declining the loan. But this doesn’t have to happen to you; find out what you can do get a satisfactory home appraisal so you can sell for the best price possible.

How to Dispute a Low Home Appraisal

When you get an appraisal, mistakes can happen, which gives you the opportunity to discover and rectify them. Here are nine steps to dispute a low home appraisal:

1. Request a Copy of the Appraisal Report

As a seller, you won’t have access to the appraisal report unless you request it. The mortgage lender usually orders the appraisal and is required by federal law to provide a copy of the report to the buyer only, according to the Bureau of Consumer Financial Protection. To get a copy, you can contact the buyer through his agent.

2. Check Every Detail of the Appraisal

If you don’t like the value an appraiser has determined, the first thing to do is study the appraisal meticulously, said real estate expert Bill Dallas, CEO and cofounder of cloudvirga, a company that helps simplify lending processes. Errors could be very simple but glaring mistakes. For instance, the appraiser might have checked the box for two bedrooms instead of three, according to Realtor.com. “Look at the details and if you find a wrong data point, fight it,” said Dallas. “That’s your best bet to improving your appraisal value.”

3. Contact Your Lender and Request a Value Appeal

If you confirm errors in the home appraisal, the next thing to do is contact your lender to appeal the appraisal. “Yes, this is a thing, and [it] is commonly done,” said Merrill.

It’s tough to convince lenders to change their valuation, but it isn’t unheard of, according to Merrill. If you’re going to pull this off, you’ll need to do some homework; it’s important that you substantiate any claim you make with evidence, Merrill said.

Read: This Is When You Know It’s Time to Switch Mortgage Lenders

4. Provide Updated Comps

Some of the most important information an appraiser uses to determine your home’s value is the comparable properties in the area that have sold. The appraiser will rely on those sales figures to value your property, said Merrill. But there are many reasons they could be misleading.

“Home prices have been rising at a torrid pace for years, and it’s safe to say appraisers can’t keep up with the market,” Merrill said. “What’s more, it’s entirely possible that a home [can increase] in value after [it] was appraised.” Have your realtor do some research and find out if this applies to your home.

5. Make Sure There Are No Missing Permits

If you’ve made additions or improvements to your home and didn’t get building permits you might have an issue regarding the value. An appraiser cannot consider the improvements in your home’s appraisal if they’re not permitted, according to Maximum Real Estate Exposure, an online real estate portal people use to advertise their homes. If you did get permits but the appraiser can’t locate them, visit your county or city government office to see if you can find them. Keep detailed records for discrepancies just like this.

6. Point Out Upgrades and Improvements to the Appraiser

A home appraiser is in your house for a short time and he might miss improvements or upgrades you made that add value to your home, said Merrill. “Just because you are aware of the renovations that took place in your home doesn’t mean the appraisers are,” he said.

Merrill’s advice is to talk to the appraiser about these improvements or upgrades in a way that is more informative than condescending. “Remember, this is a people business,” he said. “Don’t cross any boundaries with regards to appraisers, but rather, develop a working rapport with them.”

Related: How to Find Out How Much Your House Is Really Worth

7. Have Your Sales Agent Meet With the Appraiser

If you have received a low-ball appraisal, having your realtor meet with the appraiser might help, said Merrill. Make sure your agent is armed with the comparable sales and listings and knows about any improvements to your property that justify your own valuation of your home. The last thing you want is another inaccurate appraisal because you and the appraiser are looking at different data, said Merrill.

8. Appeal an Appraiser Who Doesn’t Know the Area

Every neighborhood and community has its own attributes, which is why it’s critical your appraiser is familiar with your particular area. If an appraiser lives 50 or 100 miles away, he might not be the best fit for assigning a value to your home.

It’s best to contact your lender right away with any concerns, said Merrill. An appraisal by someone who doesn’t know your area could be a valid reason for a value appeal.

9. Get a Second Opinion

After a low appraisal of the property some lenders might be gun-shy about the loan, said Merrill. “Lenders are less inclined to approve mortgages for more than the home’s appraised value,” he said.

As a last resort, you can hire and pay another appraiser if you believe your home’s appraisal should be higher. Just be aware that the buyer’s lender might not accept your appraisal because lenders typically use appraisers they trust.

Up Next: HGTV Expert’s Top Tips to Sell Your Home — Without a Real Estate Agent

Cynthia Meason contributed to the reporting for this article.