The home buying process can be disrupted by an inaccurate appraisal.The bank will only allow you to borrow up to the appraisal amount if you are the buyer.You could lose out on a potential buyer if you are the seller.Evaluate the appraisal for errors.If you want a second appraisal, request that the first one be reconsidered.
Step 1: The appraisal should be looked at for simple errors.
An easy mistake to make is saying your home has two bedrooms when it really only has three.This type of error can have a big impact on the entire appraisal.Making a mistake on the number of bathrooms is one of the most common errors.
Step 2: Determine if the comps are the same.
An appraisal uses homes that are similar to yours to come up with a market value.You can analyze the comps used by your real estate agent.If the comps are in the same school district, pay attention to the lot size square footage age amenities condition, where on the block each comp is located.
Step 3: Ask questions about the person.
The person who appraises your house might not have been the best.Did the appraiser walk through your home?They should go through the property to check it.Does the appraiser live in the area?There are nuances in the local housing market.
Step 4: You can find newer comps.
The comps should have been used for the past 90 days.A home in your neighborhood that sold shortly after the appraisal was completed might have been overlooked.It's a great way to show the bank.The Multiple Listing Service is where the comps can be found.It is great if you can find one of the homes that have been sold without being listed.
Step 5: More appropriate comps should be identified.
When your home is in good repair, the appraiser might use a rundown home as a comp.Find reasons why the comps aren't appropriate and then find better ones.The foreclosed home might have been used as a comp.If there aren't many foreclosures, then you should find a different property or ask for a market adjustment.If you do your own research, use the MLS data and avoid other data on the web.
Step 6: There are missing permits.
It is possible that you built an addition to your home to increase the value.You have to have a permit before the appraisal can include it.If the permit is missing, you can try to find it at city hall.
Step 7: Make a list of the upgrades you've made.
If the appraiser walked through your home, they might have missed some of the improvements that you have made.Write out a list of recent home improvements, such as updated bathroom or kitchen, new décor, roof, furnace, or air conditioning finished basement.
Step 8: Ask your lender about the process.
All you have to do is ask, as most lenders have a process in place.You can either complete a form or write a letter.Contact the bank if they need to make a request for reconsideration.
Step 9: Request a decision.
You can find sample reconsideration letters online, if you need to write a letter to the bank.Explain how the comps differ from your home in your critique.Any upgrades that were overlooked should be pointed out.The appraisal should be reconsidered, but never a number.A diplomatic tone is maintained throughout your letter.Even if the appraiser made a simple mistake, don't express anger or sarcasm.
Step 10: The real estate agent should meet with the appraiser.
It's a good idea to make sure your real estate agent is armed with your research: missing permits, upgrades, and new and better comps.The appraiser should be willing to meet with your broker to discuss the appraisal.Make sure to include a list of improvements that have been made before the appraisal.Don't wait until the appraisal is over to do this.
Step 11: You can ask your bank to pay for a second appraisal.
You still have options, even if the initial appraisal is refused to be changed.Your real estate agent can help you draft a demand letter.Ask the bank to pay for a second appraisal in your letter.
Step 12: You can order a second appraisal.
You can pay yourself for an appraisal if the bank doesn't pay.Discuss this option with your real estate agent.Since you will both benefit from a higher appraisal, you can ask the seller/buyer if they want to split the cost.The National Association of Real Estate Appraisers has an appraisal website.
Step 13: Work with another lender.
It is possible to start over with a different bank.You shouldn't expect a drastic change since appraisals tend to be within 5-10% of each other.The change might be enough for you.