What Happens If an Appraiser Makes a Mistake?

You’ve finally found a buyer, and the home inspection went smoothly. The finish line was in sight, but then the buyer’s appraisal came in low. However, something feels off, and you’re asking, “What happens if an appraiser makes a mistake?”

In this post, we’ll cover the types of mistakes that can occur, how to spot them, and what you can do if you think the appraiser got it wrong.

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Common types of home appraisal mistakes

Most home appraisers follow what’s known as the Uniform Standards of Professional Appraisal Practice (USPAP). While this guide can help them be objective, there’s always room for human error. Mistakes happen. 

Some appraisal mistakes stem from incorrect data collection, others from judgment calls about your home’s condition or comparable sales. Let’s take a look at some of the most common errors home sellers may encounter on an appraisal report:

• Property details are listed wrong: Square footage, bedroom or bathroom count, lot size, or other physical features may be recorded incorrectly, which can skew the value of your home up or down.
• Missed upgrades or improvements: Renovations, energy-efficient systems, or premium finishes can be overlooked or undervalued if they are not properly documented. Perhaps the upgrades are not obvious or visible. In some cases, unpermitted work may not be given full value, or the lender may not allow it.
• Fautly comps were applied: The appraiser may rely on outdated or less comparable sales (including distressed sales) or pull from a less desirable area, rather than picking from the most relevant nearby sales and explaining adjustments.
• Overlooked sales history: An appraiser may fail to analyze and report the home’s prior sale/listing history (typically the past 36 months and 12 months for nearby comps), which can affect the credibility of the appraiser’s value opinion.
• Condition misjudgment: Thican may simply be a case of overstating wear and tear, or inadvertently downplaying your home’s upkeep, which can result in a lower valuation.
• Basic geographic errors: Using comps from across a busy highway, in a different school district, or from a neighborhood with different market conditions can lead to inaccurate value estimates.
• Ignoring local market trends: An inexperienced appraiser may fail to recognize and adjust for a changing local market, which might include other factors like a large employer building a coveted business nearby.
• Unsupported adjustments: A mistake may occur when adjustments are made without a solid basis or when an appraiser uses generic “boilerplate” statements instead of providing a detailed analysis. Adjustments should be supported by data and clearly explained.
• Failure to disclose appraisal assistance: According to USPAP, an appraiser must disclose any significant assistance provided by others, such as another professional or trainee, and identify them in the report.
• Omissions or vague language: Not providing enough detail about the scope of work, reasoning, or support for conclusions can undermine the report’s credibility.
• Clerical and calculation errors: Math mistakes or typos in adjustments are typical human errors that can throw off your home’s final value number.
• Failure to analyze the purchase contract: USPAP and lender guidelines require analyzing the purchase agreement for your home, including the price, concessions, and terms. Skipping or glossing over this can cause an appraiser to overlook key context that affects value.

How often do home appraisals come in low?

Low appraisals happen more often than you might think, especially in shifting markets. According to data from Fannie Mae and Cotality (formerly CoreLogic), roughly 8%–9% of appraisals come in below contract price nationally, though this rate can rise during periods of rapid price increases or in areas with limited comparable sales.

Signs your low appraisal might be wrong

A low appraisal isn’t always the result of an actual mistake. Sometimes it reflects changing market conditions, overly aggressive pricing by the seller, or unique property features that are harder to quantify. But certain red flags can suggest your appraiser’s report deserves a closer look.

Below is a list of signs that your low appraisal might be wrong. If any of these sound familiar, it’s worth having your real estate agent dig deeper and see if you have grounds to challenge the appraisal.

• The appraiser seemed unfamiliar with your neighborhood: If they didn’t ask about local nuances or used comps from across town, it may have affected the value estimate.
• Major improvements are missing from the report: If your kitchen remodel, new roof, or energy upgrades don’t appear, the value may not reflect your investment.
• Comparable sales feel outdated or off-base: Comps from months ago in a fast-rising market — or from less desirable areas — can skew the results.
• The home’s details don’t match reality: The square footage, bedroom/bath count, and lot size in the report may differ from public records or recent measurements.
• Descriptions seem vague or inaccurate: If the report’s condition notes downplay your home’s upkeep or use generic language, important details could be overlooked.

How to dispute a low home appraisal

If you’ve spotted red flags in your appraisal report, you may be able to challenge it through the buyer’s lender. While you can’t contact the appraiser directly, you or your agent can submit a reconsideration of value (ROV) — a formal request for the lender to review the appraisal and consider a revised value based on additional evidence.

Here’s how to approach the process:

1. Work with your agent: Share the report and your concerns so your agent can help identify specific errors, missing data, or poor comparable sales.
2. Gather strong evidence: This might include photos of upgrades, receipts, contractor invoices, and a list of recent, relevant sales that support a higher value.
3. Organize your rebuttal: Present your points clearly and factually. Use data from credible sources, such as MLS records, county property records, and recent sales reports.
4. Submit through the lender: Your agent or the buyer’s agent will provide the documentation to the buyer’s lender, who can forward it to the appraiser for review.
5. Be ready for next steps: The lender may have the appraiser revise the report, order a second appraisal, or decline the request if the evidence isn’t compelling.

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How to save your sale after a low appraisal

If your dispute doesn’t raise the value — or doesn’t raise it enough — your deal isn’t necessarily dead. You still have several ways to keep your sale moving forward. Your agent can help you weigh which of these options makes the most sense based on your selling situation:

• Negotiate with the buyer: While it’s not ideal, you could agree to lower the price, split the difference, or offer other concessions to help bridge the gap.
• Ask your buyer to cover the shortfall: Some buyers may have the cash to pay the difference between the appraised value and the purchase price.
• Explore another lender: If time allows, the buyer might try a different mortgage lender, which could result in a new appraisal.
• Try to attract a cash buyer: If the deal falls apart, relisting and targeting cash buyers can eliminate the need for an appraisal altogether.
• Offer creative incentives: To sweeten the deal, you could offer to cover some of the buyer’s closing costs or include certain appliances, furniture, or extras like a pool table. You might also offer a quick closing or even a home warrenty.

Can you change an appraiser’s opinion?

Appraisers must follow the USPAP, which requires that any changes to their report be supported by credible evidence. That means the only real path to a new value is through presenting solid, verifiable information that was missing, overlooked, or misinterpreted in the original appraisal.

An ROV is the primary way to trigger this review. If the appraiser agrees that the evidence is compelling, they may revise the report. However, in many cases, if the appraiser stands by their original opinion, the lender won’t overrule them without ordering a second appraisal.

The bottom line: you can’t “talk” an appraiser into changing their mind, but you can provide solid, persuasive data that compels them to take another look.

Appraisal bias and discrimination

While most appraisers strive to be impartial, bias in the appraisal process has become a documented concern, particularly for Black, Latino, and other minority homeowners. 

Studies by the Federal Housing Finance Agency (FHFA) and Freddie Mac have found patterns in which homes in majority-minority neighborhoods are more likely to be undervalued compared to similar homes in majority-white areas. Such housing discrimination has been occurring for generations.

Bias can take many forms, including:

• Neighborhood-based bias: Using less favorable comps from nearby areas that don’t reflect your home’s market value.
• Cultural or racial bias: Allowing conscious or unconscious perceptions about the homeowner or neighborhood to affect value.
• Overlooking relevant market data: Ignoring higher-value comps in the immediate area without explanation.

If you believe discrimination played a role in your low appraisal:

1. Document your concerns: Keep a copy of the appraisal, notes from the inspection, and any evidence that bias influenced the valuation.
2. File a complaint: You can submit complaints to the lender, your state appraisal board, or the Consumer Financial Protection Bureau (CFPB).
3. Contact HUD: The U.S. Department of Housing and Urban Development accepts Fair Housing Act complaints related to appraisal bias.
4. Request a second appraisal: If possible, work with the lender to have a different appraiser re-evaluate your property.

A low appraisal doesn’t mean a canceled sale

A low appraisal can feel like a major setback, but it doesn’t have to squash your sale. Gather strong evidence and work with your agent to request a reconsideration of value. If, after all your efforts, the value opinion doesn’t change, you still have options — from negotiating with the buyer to exploring a new appraisal.

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