Appraisal Came Back too Low?

Selecting the most similar and recent sales comparable within the subject neighborhood is among the primary goals for an experienced real estate appraiser. It is a goal that is often tougher than it sounds.

Initially appraisers will focus on choosing comparable sales within the immediate neighborhood, that are preferably within 10 % of the subjects gross living area (greater variance if fewer similar sales are available). Then the appraiser must consider and factor in many other variables in the evaluation process; bedroom count, construction, condition, extent of remodeling and/or repairs and maintenance needed, amenities such as views and pools, upgrades, and so on. The analysis of all these factors are considered for each comparable relative to the subject property. It is a lengthy and far more detailed process than is commonly known.

Often a homeowner may wonder why his/her property was not appraised as high as the house a few parcels down on the same street. Especially since the homeowner knows ‘some’ of the variables that make his/her property superior such as a bigger lot size, a new remodeled kitchen and a nice new den addition. Why didn’t my appraisal come in higher that this ‘inferior’ house down the street, the homeowner wonders. Hypothetical Answer: The house down the street may have been bigger in gross living area, had more upgrades/remodeling, more amenities such as views and/or any combination there of. Plus evaluating any property isn’t based on looking at one comparable…it is based on selecting a minimum of 3-4 similar sales, which can support the value.

Bottom line? It may seem that the job of an appraiser is to walk into a property for 10 minutes and flaunt his expertise and license and rush away with a nice fat underserved check. However, if he or she was experienced, what the homeowner doesn’t see is the additional 4-5 hours of thorough analysis of substantial variables that go into the appraisal process.

What is the best advice if you feel your appraisal contains errors or omissions?

Nations Valuation Services, Inc. offers a Dispute Resolution procedure upon delivery of completed appraisal reports for all clients. As a homeowner or borrower, if you have any concerns that you believe need to be addressed in the appraisal report, please contact your lender representative and provide a detailed reason why the NVS appraisal report is not satisfactory and explain the exact issues or questions you want addressed. Please clearly identify any factual errors or omissions that you would like the appraiser to review or that may necessitate a revision to the appraisal report. If you disagree with the use of comparable sales contained within the appraisal report, please explain why in detail. The lender may present up to 4 different sales that they believe are more comparable than the sales used in the appraisal report. NVS will ask the appraiser to review the sales and briefly explain why they were not used in the report. If the appraiser feels the presented sales are appropriate, it is their decision of whether or not to incorporate them into their report. Sales presented for review should be the most recent and comparable sales available with similar characteristics as the subject.