I've heard it countless times: "The appraiser just wants to kill deals." "They're trying to come in low." "They don't understand the market."
Let's clear something up right now.
Appraisers Don't Want to Come in Low
I know this might be hard to believe when you're staring at an appraisal that came in $20,000 below contract and your deal is falling apart. But the reality is that almost no appraiser is intentionally trying to torpedo your transaction.
Here's what you need to understand: An appraisal isn't the appraiser's opinion in the way you might think. It's what the market data shows. When an appraisal comes in "low," it's because the market data supports that value - which is why some appraisers joke that they never come in low. The number reflects where the data is, even if it's lower than the contract price.
And here's the part most agents don't realize: appraisers hate coming in low.
It sucks for us. It means revision requests, reconsiderations of value, angry phone calls, and frustrated emails. But more importantly - and lenders won't admit this - when an appraiser comes in low, especially multiple times in a short period, their volume with that lender tends to drop off. Sometimes significantly. Sometimes they get dropped entirely.
I've personally been either dropped or received significantly less work from multiple lenders over the years because appraisals came in below contract value. While lenders aren't supposed to penalize appraisers for this, every appraiser I know can tell you firsthand stories of facing consequences for coming in where the data indicated.
So trust me: we're not doing this to be difficult. We're doing it because the appraisal has to come in where the data supports.
But Aren't Some Appraisers Better Than Others?
Absolutely. Are there higher quality appraisals than others? Yes. Could an appraiser make a mistake and come in low because they didn't analyze the data well enough or missed some comparables? It happens.
That's why it's important to actually look at the appraisal and understand why it came in low, rather than just assuming the appraiser was out to get you.
Let's talk about the actual reasons appraisals come in below contract price.
This is one of the biggest factors, and it's not always intentional on either side.
When you're pricing a house, you might choose comparables that support the value you want to achieve. The appraiser might have a different opinion and choose different comps. Sometimes this happens because agents intentionally cherry-pick the best comps. But often, it's unintentional.
Here's what I mean: A comp can look really good at first glance. Similar design, similar size, same neighborhood, sold recently. Perfect, right?
But then you start making adjustments. It was 200 square feet bigger. One more garage bay. Two fireplaces instead of none. Walkout basement instead of in-ground. Stucco instead of siding. Had a wet bar.
All of a sudden, all these differences that got missed in the initial glance come back to haunt you. Death by a thousand cuts. What looked like a great comparable needs so many adjustments that it's not actually that comparable anymore.
This relates directly to the next issue...
If you didn't adjust for those size differences, garage count, basement finish, and amenities in your CMA, you may have overpriced the home.
Now, here's the thing: If a home is significantly overpriced, it usually won't go under contract in the first place. So missing analytics in your CMA is more likely to result in the listing sitting than in an appraisal coming in low.
But it can happen - especially in multiple offer situations where buyers get emotional and overbid.
Let me be clear: It's very rare for the market to shift significantly in the week or two between contract and appraisal.
But it's very common for agents to use comparables from 3, 4, 6, even 8 months ago without accounting for market changes.
If you're looking at a market with 12% annual depreciation, that's roughly 1% per month. A home that sold six months ago could be overpriced by 6% if you didn't apply time adjustments. On a $500,000 house, that's $30,000.
This is why we spent time in previous articles talking about hyperlocal market trends and time adjustments. They matter.
Sometimes a home has appeal to a buyer that draws an above-market price.
This is especially common with homes that have unique features, extensive upgrades, or custom elements. The perfect buyer comes in and is willing to pay a price above what the market data indicates.
And that's great for you and your seller! But here's what you need to understand:
The bank doesn't want to lend based on what one specific buyer is willing to pay.
An appraisal reflects what the typical buyer would pay, not the perfect buyer. Why? Because if the lender had to take the property back in foreclosure, they're not going to sit on it long enough to find that ideal buyer. They want to know: within a reasonable time on market, what would the typical buyer pay?
When a home has unique features or upgrades that the market data doesn't support, the appraisal might come in lower than what your enthusiastic buyer contracted for.
This is extremely common. In fact, when an appraisal comes in significantly lower than contract - I'm talking $30,000, $50,000, $100,000+ - it's usually because there's something unique about the property that allowed you to obtain a much higher contract price, but there's simply no market data to support those features.
Let's be honest: mistakes happen.
The two biggest errors an appraiser can make:
For example, I've seen appraisals where the appraiser accidentally adjusted in the wrong direction for something like garage count. If a garage adjustment should be $10,000 per bay, clicking the wrong button or having software auto-adjust incorrectly could swing the value $20,000-$40,000 for a one versus two-car garage difference.
These errors are uncommon and usually caught by the appraiser, lender, or appraisal management company. But they can slip through.
There are also scenarios where an appraiser might not make an adjustment that you think is needed. But before you assume it's an error, understand this: sometimes the lack of adjustment is intentional.
If the subject and comp both have fireplaces but other comps don't, and the appraiser didn't adjust for fireplace, it might be because the market data shows that typical buyers in that market don't pay more for fireplaces. When similar homes with and without fireplaces are selling for the same price (after other adjustments), no fireplace adjustment is warranted.
When an appraisal comes in low, don't immediately get frustrated and assume the appraiser is wrong. Take a step back and actually look at the report.
Look at the comparables used. Look at the adjustments made. Try to understand why the appraiser did what they did.
Ideally, look through sections like the supplemental addendum where the appraiser explains their methodology and supports their adjustments. If there's no explanation in the report, look at the adjustment grid and calculate what was done - divide the square footage adjustment by the difference in square footage to figure out the per-square-foot amount.
Ask yourself: Does this seem reasonable?
Big property differences with no adjustments - One comp has a 5-car garage, another has a 2-car, no adjustment was made, no explanation was given, and the comps are still very different in adjusted price. That could indicate a needed adjustment was missed.
All comps adjusting in the same direction - If all the comparables are being adjusted upward or all are being adjusted downward, the appraiser might not have bracketed well. They may have used comps that were all too low to begin with (or all too high), and different comparable selection could have resulted in a better range.
Missing adjustments for obvious differences - A 500 square foot size difference, a garage count difference, a walkout vs in-ground basement - if there's no adjustment and no explanation, that's worth questioning.
Lack of clarity or explanation - If the report doesn't explain how adjustments were calculated or why certain comps were selected, it's harder to understand the appraiser's reasoning.
Okay, so the appraisal came in low. You've looked at it. You think there are legitimate issues. What do you do?
Here are four methods, ranked from most likely to succeed to least likely.
This is your best shot at getting the value increased.
But - and this is critical - these have to be factual errors, not things you disagree with.
Factual errors:
These are objective facts that can be verified and corrected.
Not factual errors:
These are subjective classifications. The appraiser is trying to fit the property into a description based on their analysis. You might disagree, but it's not necessarily wrong.
Here's the test: If you think the condition rating is wrong, look at how the comparables were rated. If you would have called them all C2 and the appraiser called them all C3, they were consistent. And even if they changed everything to C2, it wouldn't result in any adjustments because all properties would be rated the same.
Sometimes agents will say "they didn't give any adjustment for the amazing mountain view this property has." But when you look at the comparables, they all have similar views. So while it might be better to acknowledge the view in the description, the lack of adjustment didn't impact the value.
Bottom line: Focus on objective, verifiable errors that actually affect the value.
This is what most agents are familiar with, but I'm going to recommend you go a step further than you probably normally do.
Here's the key: Actually adjust your proposed comparables using the adjustment amounts from the original appraisal report.
Why? Because if the appraiser adds your comp to the report, they're almost certainly going to use the same adjustments they already used. If they adjusted at $50 per square foot for above-grade square footage, they'll use $50 for your comp too.
So take your comparable and apply the adjustments already in the report:
Apply those to your comparable and figure out:
First, the underwriter at the lender, because you'll be presenting this to the lender (NOT the appraiser - more on that in a second).
Second, if the lender passes it through, the appraiser.
And here's what both are looking for: Is this comparable more similar (requiring lower gross adjustments) than the comps already used?
If your comparable requires 10-15% gross adjustments when the existing comps are at 3-5%, it's not a better comp by definition - regardless of what value it supports. It requires too many adjustments to be considered more similar.
But if your comp supports your value AND requires similar or lower gross adjustments than what's already in the report, you have a very strong case for why it should be added.
Critical warning: Present to the lender, NEVER directly to the appraiser.
I cannot stress this enough. If you contact the appraiser directly, even if I tell you it hasn't influenced me, when the lender asks if you've reached out and I say yes, I will be removed from the assignment. They'll order a brand new appraisal from scratch. You'll lose time and potentially blow your contract timeline.
Everything goes through the lender. Period.
It prevents you from presenting comps that actually hurt your case. I've had situations where agents presented comparables that, once adjusted using my methodology, had lower gross adjustments than my existing comps and came in at values that would have lowered my opinion of value.
Then I'm stuck deciding: Do I stick with my original comps? Or do I have an obligation to consider these new comps that are technically more similar, even though they'll drop my value even further?
Don't put yourself - or the appraiser - in that position.
This method is for situations where you think the comparables were okay, but the adjustments were inappropriate.
For example: The appraiser adjusted at $25 per square foot, and you can clearly demonstrate that a larger square footage adjustment would have brought the comparables closer together in value and supported your contract price.
Or you have data analytics that indicate more supportable adjustment amounts.
Here's the reality check: This won't get the original appraisal changed.
I can't imagine any appraiser changing their adjustments based on an agent's argument that their methodology was wrong. We use statistical analysis and market data to support our adjustments.
But - and this is a big but - in cases where the lender and loan type allow a second appraisal to be ordered, presenting strong evidence that the adjustments were flawed could support that request.
This is a long shot. It's not available in all scenarios. Talk to your lender first to see if it's even possible.
And if you're going to try this, you need very strong data support. This might mean getting your own appraisal done to rebut the original. This might mean sophisticated data analytics showing different adjustment amounts are more supportable.
But understand going in: this is unlikely to change the original appraisal value.
This is Method 3 taken even further: arguing that both the comparable selection and the adjustment amounts were problematic.
Same reality check applies: This won't change the original appraisal.
It could potentially support a request for a second appraisal in very limited circumstances.
You'll need extremely strong data support - likely your own professional appraisal showing different comps and different adjustments.
This is a last-resort strategy when you have rock-solid counter-evidence and the loan program allows for a second appraisal.
For Methods 1 and 2, our partner company PropertyBrain created a flowchart that walks you through what to look for in the appraisal report and how to evaluate comparables you're considering presenting. Download it here
Most appraisers aren't trying to kill your deals. We're analyzing market data and coming in where that data supports.
When an appraisal comes in low:
The key is approaching low appraisals strategically rather than emotionally. Understand why it came in low. Determine if there are legitimate issues. Present your case through the lender with solid supporting data.
And remember: sometimes the appraisal is correct, and the contract price was simply above what the market data supports. In those cases, no amount of fighting will change the outcome - and that's actually the appraisal doing exactly what it's supposed to do.
