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Other than increasing your down payment, is there anything to do about a low appraisal?

Challenge the appraisal. That could work if you can show that the appraiser made what you feel are legitimate mistakes in the calculation, if the appraiser was unfamiliar with property values in the neighborhood, or if one or more foreclosed properties or short sales were included in the comps.

According to the NAR (National Association of Realtors), recently 9% of real estate agents reported a contract cancelation, 10% reported a delay and 13% experienced lower sales price negotiations due to a low appraisal. If you've had this experience while buying or selling a house in Ontario you know how inconvenient it can be to go through.

To challenge an appraisal, you need to make your case with the commissioning lender. Though lenders are prohibited from communicating the appraiser, they will commonly send the borrower's rebuttal to a third-party entity that hires appraisers for review.

A rebuttal needs to be limited to actual errors, flawed methodology by the appraiser, and/or additional new or missed comps, which are recently sold homes that are comparable to the house that is for sale.

You have to write a formal rebuttal letter, also called a reconsideration letter, with input from a real estate agent or an appraiser. Be sure to show no emotion in your letter. Just tell the facts.

Many lenders now work with appraisal management companies which may have appraisers with limited experience. The lender gets a certain amount for an appraisal and may choose to select an appraising company that charges less.

Find out if the lender used an appraiser who comes from your county and who is a certified senior residential appraiser (SRA) or who is a member of the Appraisal Institute (MIA).

Meet the new appraiser when he or she inspects the home and share your knowledge of recent short sales and foreclosures that might skew the comps.

Mention any expensive updates, inclusions, and features that the first appraiser might have missed. Some key upgrades behind the walls like insulation, electrical, plumbing and roofing could be overlooked in a quick appraisal.

Also, find out what kind of appraisal was done on the property. If a driveby inspection was completed they wouldn't have seen all the upgrades for themselves.

If you have any questions about this real estate world just give me a call/text/email. I would love to help anyway I can!

Kari Clark

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