Best Practices for Submitting Appraisal Reconsiderations

Everything seems to be going smoothly with your home sale, but suddenly you hit a big bump: the home appraisal comes in below the agreed-upon sales price. This scenario is becoming increasingly common, as home prices rise and appraisals struggle to keep up. According to CoreLogic, Inc., a national real estate researcher, this trend was present even before the pandemic and continues today.

If this happens to you, it’s not the end of the road. You can request that the appraiser reconsider their valuation based on additional information you can provide. But how can you ensure you’re in the best position to make your case and bridge the gap between the appraised value and the contract price?

Guidelines for your best chance of a successful Appraisal Reconsideration:

It’s important to be aware that using the square foot method is not a reliable way to determine the appraisal valuation of a home. This is because as the size of a home increases, the price per square foot tends to decrease. As a result, using cost-per-square-foot data from homes of different sizes can lead to skewed results. Additionally, this method only takes into account one factor – square footage – and doesn’t consider other important aspects of a property, such as a garage, basement, deck, pool, view, and location, among others. When presenting information to an appraiser, providing price-per-square-foot data is unlikely to be helpful. Instead, approved methods for appraising real estate established by the Appraisal Foundation should be used. These include the sales comparison approach, income approach, and cost approach. These methods take into account a variety of factors to arrive at a more accurate valuation of a property.

When it comes to providing information to an appraiser, the most valuable data you can offer are comparable sales. The sales comparison approach is the most widely used and accepted method for valuing residential properties. In this approach, the appraiser uses comparable sales to determine the value of your home. The most effective sales to provide your appraiser are those that closely resemble your home, are located in your market, and reflect current market conditions.

Ideally, the best sales are the ones that are most similar, closest in proximity, and most recent.

By providing your appraiser with the most accurate and relevant information, you increase the likelihood of arriving at a fair and accurate valuation of your property.

Phone a Friend:

To increase your chances of submitting a successful reconsideration request, it’s recommended to contact your realtor or an appraisal company such as Authority Appraisals for assistance in gathering information to provide to your appraiser.

Here are some of the most useful types of information you can offer to the appraiser:

Additional comparable sales: If you know of other recent sales that are more similar to your property in terms of house type, location, and sale date, provide this information to the appraiser.
Inside information on comparable sales: If you have any knowledge of distressed conditions or otherfactors that could have affected the sale of the comparable homes the appraiser used, let the appraiser know.
Unique neighborhood information: Provide any relevant details about the neighborhood that the appraiser may not be aware of, such as the proximity to schools, parks, or amenities.
Multiple offers received: If you received multiple offers on your property, make sure the appraiser is aware of this.
Non-MLS sales: If any of the comparable sales used by the appraiser were sold by the owner, provide this information as it may not be included in the MLS data.

How do you submit your request for reconsideration?

To submit a request for reconsideration, it’s important to understand that the lender must always initiate the request on your behalf. This is because the lender is technically the appraiser’s client and the appraiser is bound to their client by ethical and privacy standards outlined in the Uniform Standards of Professional Appraisal Practice (USPAP) in the United States.
To begin the process, submit your request to your lender with professionally presented and well-organized information. It’s essential to be respectful to the appraiser, as a positive and cooperative attitude can go a long way in achieving a favorable outcome. Remember, it’s always better to “catch more flies with honey than with vinegar.”
After receiving your request, the lender will decide whether to proceed with the reconsideration request and communicate the results to you. Keep in mind that the lender has the final say in whether to present the reconsideration request to their appraiser

My reconsideration didn’t impact the appraised value. What other options do I have?

If your reconsideration request doesn’t result in the desired outcome, don’t worry; you still have a few options available.

First of all, you can request a desk or field review of the appraisal from your lender, or ask for a second appraisal to be conducted. However, it’s important to note that the decision to proceed with this option is up to the lender. The lender may agree that further due diligence is necessary to ensure the appraisal’s accuracy, or they may believe that the appraisal is already reliable.

Secondly, you can use the appraisal to try and renegotiate the sales price, provided the terms of your contract allow for it. While not ideal, this may be a viable option depending on your situation.

Remember that while the appraisal reconsideration process can be frustrating at times, but it’s important to remain patient throughout and maintain open and respectful communication with your lender. Keep in mind that they are bound by ethical and professional standards, and by working together, you can increase your chances of a successful outcome. Don’t be afraid to seek guidance from professionals such as realtors or appraisal companies for assistance in gathering information to support your reconsideration request. By following these guidelines, you can maximize your chances of achieving the results you hope for.