The Realtor’s Guide to Appraisals Part 9: Can a Realtor Challenge an Appraisal?

Have you ever had a listing that didn’t appraise for contract price?  It’s frustrating, for sure – especially if you feel like you don’t have any options!  The home didn’t appraise for contract price, so the deal is dead, right?  Not at all!  When this happens, most parties have three options:  lower the sale price to the appraised value, have the buyer come out of pocket for the difference, or cancel the sale.  But those are all options you’ll need to consider after challenging the appraisal.  


A Common Scenario


You took a brand new listing in a hot market, and priced it aggressively.  You know it’ll set the top of the market if it sells, but things have been selling so high lately, you decide to push the price just a bit.  You list the home at $399,900 and the appraisal comes back at $375,000.  It’s disappointing. Frustrating. Confusing. Trust me, I’ve been there. 

When I sold my last home, the appraiser came in and told me to my face, “Oh, there won’t be any problem.  I’ve got comps for this house all day long”.  And not surprisingly, our appraisal ended up coming back short of the sale price.  So I know.  It’s not fun.  

Sometimes when a home doesn’t appraise for the price a buyer & seller have agreed upon, a deal can completely fall through.

However,  if you have the time, before exploring your other options (see below), it never hurts to contact the appraiser.  There’s no guarantee that the appraisal will be changed, but going about it in the right way will definitely increase your chances.  We call this a reconsideration of value request.  Now one quick caveat before we get into the details.  Not all banks or mortgage companies allow reconsideration requests.  Most do, but some do not.  Just keep that in mind. 

So what exactly is the ‘right way’ to go about a reconsideration of value request?

Steps for a Reconsideration of Value


  1.  Get a Copy.  The first step in the reconsideration process is to get a copy of the appraisal report, if you can.  Don’t rely just on the bank’s word that the appraisal came back under contract price.  See if you can get a copy of the report. If you’re the buyer’s agent, that won’t be too hard as long as the bank gives a copy to your buyer; however, if you’re representing the seller, you’ll need to get a copy from the buyer’s agent, or at least call that agent and have a conversation.  What this does is allow you to be informed.  

What I’m trying to not encourage you to do is this:  after you get a call from the bank saying the appraisal came in $5,000 under contract price, you immediately fly off the handle and call the appraiser to chew her out.  I would not recommend this!


  1.  Read Carefully.  So once you have a copy of the report, make sure the appraiser hasn’t materially misrepresented your listing.  What I mean by that is – check the square footage.  Is it what you thought it should be? Are the bedrooms & bathrooms accurate?  Did the appraiser list all of the improvements the homeowner made in the last 10-15 years? This is a good starting place to point out errors, as some may actually impact value.


  1.  Challenge the Comps.   Look through the comparable sales the appraiser used.  They should all be located in or near the subject’s neighborhood, so you might have some insight into these homes that the appraiser didn’t have.  Did Comp #2 sell in foreclosure and the appraiser missed it? That could be a huge oversight. Was Comp #1 inferior in overall condition but the appraiser called it similar?  Maybe Comparable #3 didn’t have a 30×40 detached building like your home did, but the appraiser didn’t adjust for that difference.  These are things that would be helpful for an appraiser to know.


  1.  Provide Alternate Sales.  After you’ve combed through the sales already used in the report, the next step – and honestly the best way to challenge an appraisal – is to provide alternate sales.  Maybe the appraiser missed a sale, or didn’t know a home just down the street closed just a week ago.  Either way, providing these sales could really help your case. If done right.


What does that mean, “If done right”?


The sales you provide to the appraiser need to be as comparable or more comparable than the sales already in the report.  Here’s what I mean by that.  Let’s say your listing is a 2,400 square foot Cape Cod-style home with no basement.  The sales used in the appraisal ranged from 2,000 – 3,000 square feet and all sold within the last six months.  If the alternate sales you provide are all over 3,000 square feet, and all sold substantially higher than your listing, then it’s likely that the appraiser won’t even consider them. You see, the appraiser needs to have a compelling reason to include alternate sales you provide.  Don’t go out and just find the highest priced sale you could find. Also, if the sales the appraiser used all sold in the last six months, and you provide a 12-month old sale only because it sold much higher, then the appraiser will probably not use that sale.

So when you provide alternate sales, make sure & include commentary that explains why your sales are more comparable to the subject property than the sales used by the appraiser.


  1.  Be Short & Sweet.  Literally.  The appraiser doesn’t have time to read your 20-page book on why your listing is worth $400,000.  Make a list of the items the appraiser missed, point out why the comps he or she used were not the best, and describe the new sales you’re providing in a concise, yet helpful way.  And be nice. I can’t stress this enough. Appraisers live in a world where everyone thinks they can do our job. As a Realtor, you understand that.  Think Zillow.  Think FSBO.  It’s no fun, is it?!  If you approach this topic professionally, the appraiser will be much more likely to at least look at what you have to say. 
  2.  Don’t Pressure.  Try to communicate your findings and sales in a way that doesn’t say, “These sales support our contract price of $400,000.”  An appraiser can’t be pressured to ‘hit’ a specific number. Remember, it’s called a Reconsideration of Value Request. You’re not asking the appraiser to change the report, but to reconsider the value.  This is key.


 And finally….

  1.  Send it to the Bank.  As we’ve mentioned before, an appraiser cannot be pressured to hit value.  One way the Powers That Be try to keep this from happening, is that no one can discuss value with an appraiser except for the client (unless the client gives the green light).  So once you have your reconsideration request written up, get it to the bank that ordered the appraisal, and they’ll pass it along to the appraiser. This keeps everything on the up & up and no one can be seen as influencing or being influenced.  


When you find yourself needing to request a reconsideration of value (and trust me – you will!), feel free to use the free template we created, called, Reconsideration of Value Request.  You can find it at; hover over “The Appraisal Blog” and click on Resources.

What if none of this works?


If you’ve followed the steps above and it hasn’t changed anything, you have a few options.  All is not lost!


Option 1:  Lower the sale price to the appraised value.


Sometimes, if the difference in sale price and appraised value is minimal, a seller will simply lower the sale price to reflect the appraisal.  Say your listing was under contract at $150,000 and the appraisal came back at $140,000.  Maybe the seller just lowers the price to $140,000 to get the deal done.  They take less than they thought they were going to get, and the buyer gets the home for a price they’re comfortable with.  The home is sold.  Everyone moves on.  And everyone is (mostly) happy. 


Option 2.  The buyer comes out of pocket for the difference.


Sometimes a seller won’t budge off the contract price (you’ve had one or two of those, I’m sure!), even after an appraisal comes in below contract.  “I’m the seller, and we agreed to $600,000, and I won’t take one single penny less!”


Now if the buyer is obtaining financing in order to purchase the home, the bank will likely only be lending a percentage of the sale price.  If the sale price is $100,000, and it appraises at $100,000, and the bank will lend 80% of that, then the buyer has $80,000 from the bank and has to come up with a $20,000 down payment.


But suppose the home only appraises for $90,000.  Now, the lender will only loan $72,000 ($90,000 x 80%).  That means if the seller isn’t willing to lower the price, the purchase has to pony up an additional cash on top of the 20 grand they were originally expecting to pay.  That could be a deal breaker for some.  


Option 3.  The sale is canceled.


This is the worst-case scenario.  The seller won’t budge, and the buyer is strapped for cash.  So what do you do?  If a meeting of the minds can’t be reached, you simply void the contract, go look for another buyer for your listing, or home for your buyers.


Hopefully you never make it to this last option.  Try completing a reconsideration of value first, if the lender will allow it.  And then, your gifts of negotiation come in and hopefully the deal survives!  If you have any questions about a reconsideration of value, no matter what part of the country you’re from, reach out to me anytime at  I’m always happy to help!


Committed to helping you understand your home’s market value,

Ryan Bays, SRA, AI-RRS

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