What to do When You Don't Agree With Your Appraiser's Estimate of Your Home's Value By Joel McDonald At Isnare.com Ezine Articles

What can you do if you disagree with a real estate appraisal? The first thing you need to remember is that the appraiser's role is to provide impartial opinions based on his experience and knowledge. The American Society of Appraiser and the Appraisal Institute both promise from their members a commitment to strict ethics and standards.

The appraisal process begins with an evaluation of the land itself-its size, its suitability for the described purpose, and its location. Next, the appraiser looks at the structures built on the land. On a tract of residential property, this starts with the house, and includes the garage if it is a permanent structure that cannot be moved. Sheds or movable structures generally are not included.

Third, the appraiser looks at components added to the house and to the land, their purpose, and their permanence. If you've installed a security lighting system, is it clear that you intended to add this as a permanent fixture to the real property? Or can one easily see that the lighting is meant to move with the original installer? An aboveground pool will not add value to property; an in-ground pool does.

If you disagree with an appraiser's estimate, first you need to know who to contact. In the case of real property transfers involving a lender, federal law states that the lender chooses the appraiser, the buyer's lender will be your contact. If a lender is not involved, direct your challenge through the party that hired the appraiser.

Next, you must identify which of the three areas you are challenging. Ask the lender for a copy of the appraisal report. Look over the comparable data pages to make certain the appraiser utilized the most up-to-date information available about the community. You can find out which houses he compared to establish local home value and submit your own comparison.

It's also possible that you're aware of commercial or zoning changes that are about to take place in the community. Even though the appraiser is supposed to be informed about the area, he might have overlooked something. If you think the appraiser has miscalculated an improvement you've made or not assigned it as a permanent investment in the property, you can also mention that.

The procedure is to notate all points that you are disputing and submit your written report to the lender. It is up to the lender to request an appraisal review. Follow up with the lender to ensure that the review is done. Keep in mind the appraiser will not be happy that he has been contested. If you cannot convince the appraiser to change his estimate, then you need another lender.

Usually the buyer chooses who his lender will be. If you anticipate that an appraisal might be negative to your interests, you can stipulate in your answer to the buyer's offer that you want to approve his lender or his appraiser.

Otherwise, you and the buyer will most likely have to negotiate the difference between your asking price and the appraised value. The buyer cannot simply offer to pay the amount over the appraised value without incurring negative equity. You might need to drop your price.

If your asking price is below the appraised value, but the appraiser still recommends repairs or updates, you can negotiate with a motivated buyer. For example, the buyer can offer you more than your asking price-as long as this remains below the appraised value-but then you generally repay it at the closing.

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