A low appraisal can lead to a canceled sales contract because lenders won’t approve mortgages for more than the home’s value.
Most lenders have a process for challenging an appraisal. However, it will take a lot of work and research. You must compare other properties to your home in the area, and point out any missing new or upgraded features in your home. While the following option’s wont guarantee that your appraiser take a second look, they can help:
The most important thing in challenging a home appraisal, is that you have to give them a concrete reason to change their opinion. Most times, people will just call the appraiser and tell him he is wrong. This statement in itself doesn’t do you any favors; aside from the attitude that probably went along with it on the phone.
Read your copy of the home appraisal, then consider whether you can offer the single most persuasive item: new comps, or, “new points of comparison.” If a similar home in your neighborhood recently sold for more than your appraisal, especially if the sale took place after the appraisal, bring that to your bank’s attention.
You should be able to point out poor or missing comparisons. Look at the comps the appraiser used. He or she might not know all the homes in your neighborhood that have sold recently. If properties rarely change hands in your neighborhood, that’s another potential problem. Comps should be properties that have sold within the last 90 days. If your appraiser used older comps, you may be able to show that the market has changed.
Be sure to show any changes you’ve made to your property they may have missed. An appraiser might not have noticed your home’s new or upgraded features such as a renovated bathroom or kitchen, a new roof or fireplace, or a brand new air conditioning unit.
When all else fails, seek a second opinion. Getting another opinion doesn’t guarantee success, and in the end, you may or may not be able to get the value changed. The appraiser has to answer to underwriters, so they’re not very willing to change values. The bottom line here, is that you have got to give a reason for the appraiser to come back and be willing to give another shot. You can’t complain just because you think your home is worth more than what it is.