When and how to challenge an appraisal report

A home appraisal report contains the final appraised value and the details that went into estimating that value. The appraised value can be an important factor for a buyer's mortgage approval and the final sale price of a home, so reviewing it in detail can help both buyers and sellers.

For buyers, simply ask your lender to provide you with a copy of the appraiser's report. If you're a seller, you can ask your real estate agent to request a copy of the report from the buyer or their agent — but it's up to them whether to share it.

If you have serious concerns about an appraisal report's accuracy, it's possible to challenge it. But first, you'll want to understand the different parts of an appraisal report and what red flags to look out for.

What are the key parts of an appraisal report?

The Appraisal Foundation's experts explained to us the essential parts of an appraisal report that homebuyers and sellers should understand:

1. Property information: The report contains details about the home, like its address, number of bedrooms and bathrooms, and total square footage. The appraiser gathers this information during their visit to the property or from other sources.
2. Neighborhood information: The report also describes the neighborhood, noting whether it's urban, suburban, or rural. It includes market conditions, like whether homes are selling quickly or slowly. It should not include racial demographics.
3. Comparable properties: Known as "comps," comparable properties are similar homes in the area that have recently sold. An appraiser uses comps to help develop their opinion of the home's value by comparing features and condition.
4. Valuation method: This section explains the one or more methods an appraiser uses to develop their opinion of the home's value.
5. Addendum: This optional section might include photos of the home and comps, as well as additional information that supports an appraiser's opinion of the home's value.

What are potential red flags in an appraisal report?

Keep an eye out for these potential red flags in an appraisal report, as they could indicate errors or inconsistencies that might affect your home's valuation:

• Irrelevant information: Watch out for information that's not supported by facts and lacks a clear explanation. Any mention of racial demographics is irrelevant and a red flag.
• Inaccurate details: Make sure all details about the home are consistent throughout the report, especially things like the number of bedrooms, bathrooms, and square footage.
• Questionable comps: Review the comparable properties the appraiser used, paying close attention to their features and location. If they included any comps that are very different from your home or located far outside your neighborhood without a clear explanation, that may be a red flag.
• Quality rating: Look at the quality rating the appraiser listed for your home and the comparable properties. It could be a red flag if there's a big difference in quality ratings but no explanation or adjustment to the comps from the appraiser.

What if you disagree with an appraisal report?

Appraisers work hard to create accurate reports, but occasionally they can make mistakes. They might accidentally overlook a detail about a home or not give enough weight to specific information. If you spot any errors, immediately share your findings with your real estate agent.

Typos and other small mistakes that don't impact a home's worth can often be fixed quickly without having to challenge a report. However, if you believe there are serious issues that led to an inaccurate valuation, ask your real estate agent about submitting a formal reconsideration of value (ROV) to challenge the appraisal.

How do I request an ROV?

If you're a buyer and want to challenge the appraisal report, you can speak to your lender about requesting an ROV. Sellers usually don't communicate directly with the lender, so you'll need to work with your real estate agent to ask the buyer or their agent to request an ROV. After the lender is contacted, here's what happens:

1. Lender approves or denies the request: After receiving the ROV, the lender decides whether to approve or deny the request based on the new information provided by the buyer.
2. Appraiser reviews the new information: If the lender approves, they send the new information included in the ROV request to the original appraiser. The appraiser thoroughly reviews all concerns and either revises their opinion of value or explains why their original decision stands.
3. Lender shares the results with the buyer: Once the appraiser's review is complete, they send an updated or reconfirmed appraisal report to the lender. The lender will then share the results with the buyer. Sellers are often notified of the outcome through their agent.

While there's no guarantee the appraised value will change, submitting a well-prepared ROV with clear, fact-based reasons for challenging the report may increase the likelihood an appraiser revises their opinion of value.

You also have the right to file a complaint if you believe the appraiser didn't follow Uniform Standards of Professional Appraisal Practice guidelines. For help figuring out where and how to file your complaint, call the Appraisal Subcommittee Hotline. Note that filing a complaint is a separate process from requesting an ROV and won't result in changes to the appraiser's opinion of value in the appraisal report.

Get answers to more of your home appraisal questions by using our Home Appraisal Advisor.