What Happens If an Appraiser Makes a Mistake?
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Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
You’ve finally found a buyer, and the home inspection went smoothly. Everything seemed to be moving along as expected, and the finish line was in sight. Then the buyer’s appraisal came in low, leaving you wondering whether the appraiser got something wrong. Now you’re asking, “What happens if an appraiser makes a mistake?”
In this post, we’ll cover the types of appraisal 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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What are the common types of home appraisal mistakes?
Most home appraisers follow what’s known as the Uniform Standards of Professional Appraisal Practice (USPAP), which are established standards for how they inspect a property, analyze comparable sales, determine value, and report their findings. While this guide can help them be objective, there’s always room for human error. Mistakes happen.
Some appraisal mistakes happen because the appraiser collects or records the wrong information. Others are 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:
- Wrong property details: 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 visible. Or, in some cases, unpermitted work may not be given full value, or the lender may not allow it.
- Faulty comps: The appraiser may rely on outdated or less comparable sales, including distressed sales, where the sellers are under financial pressure, such as in short sales or foreclosures. They could pull from a less desirable area, rather than pick from the most relevant nearby sales and explain adjustments.
- Overlooked sales history: An appraiser may fail to analyze and report the home’s prior sale or 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: This 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.
- Undisclosed 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.
- Incomplete contract analysis: 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?
About 10% of home appraisals come in below the agreed-upon sale price, according to industry estimates. That means a low appraisal isn’t the norm, but it’s also not especially rare when you’re buying or selling a home. A low appraisal can happen when the market has changed quickly, there aren’t many comparable sales, or, as mentioned above, the appraiser misses important details about the property.
Appraisal issues can affect the timeline, with about 6% of contracts reportedly getting delayed because of such problems. While a low appraisal can be frustrating, it doesn’t necessarily mean the deal is dead.
What are the signs that 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 appraisal results.
- The home’s details don’t match reality: The square footage, bedroom and 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:
- Work with your agent: Share the report and your concerns so your agent can help identify specific errors, missing data, or poor comparable sales.
- Gather strong evidence: This might include photos and receipts of home upgrades, contractor invoices, and a list of recent, relevant sales that support a higher value.
- Organize your rebuttal: Present your points clearly and factually. Use data from credible sources, such as multiple listing service (MLS) records, county property records, and recent sales reports.
- 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.
- 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.
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.
- 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 warranty.
- Try to attract a cash buyer: If the deal falls apart, relisting and targeting cash buyers can eliminate the need for an appraisal altogether.
»Learn more: A low appraisal is one hurdle, but it’s not the only mistake that can cost you time or money when selling your home. Try our Home Seller Mistake Mashup Machine to see which common seller mistakes you should watch out for before they get in the way of your sale.
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.
How appraisal bias leads to lower values
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 where 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:
- Document your concerns: Keep a copy of the appraisal, notes from the inspection, and any evidence that bias influenced the valuation.
- File a complaint: You can submit complaints to the lender, your state appraisal board, or the Consumer Financial Protection Bureau (CFPB).
- Contact HUD: The U.S. Department of Housing and Urban Development accepts Fair Housing Act complaints related to appraisal bias.
- Request a second appraisal: If possible, work with the lender to have a different appraiser re-evaluate your property.
How to distinguish appraisal fraud vs. error
Start by looking at intent. An appraisal error is usually an honest mistake, such as using the wrong square footage, overlooking a recent renovation, or relying on outdated comparable sales. Appraisal fraud, on the other hand, involves intentionally providing false or misleading information to influence the property’s value. For example, an appraiser might deliberately leave out relevant comps or manipulate the report to support a specific value.
A mistake can often be corrected by pointing out inaccurate information and asking for a review or reconsideration of value. Fraud is more serious and may involve evidence of deliberate misconduct, conflicts of interest, or attempts to deceive someone involved in the transaction. If you suspect something more than an innocent mistake, consider documenting the issue and seeking professional or legal advice before taking further action.
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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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