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5 Reasons Why an Appraisal Came in Low
January 14th, 2020 1:30 PM

5 Reason Why an Appraisal Came in Low

Having an appraisal come in low can be upsetting to both the buyer and seller. Considering the impact a low appraisal can have on the home buying and selling process, it's important to educate yourself on what factors typically lead to a low appraisal. 

1. The house is a disaster

Appraisers are human. In addition to taking objective measurements in your home such as how many bedrooms and bathrooms, they also have to look at subjective measurements as well. An appraiser will look at the interior and exterior condition of your property—if there are dirty dishes in the sink, clothes hanging around, or a permeating stench of cat urine, this will affect an appraiser's judgement. Ideally, your home should be pristine on the day the appraiser arrives from the doorstep.

2. Basements are calculated differently

Your home may have an incredibly finished basement, but the appraiser will still have to calculate the value of the basement differently than the square footage above ground. This is, in fact, one of the more common reasons why an appraisal comes in low. Valuing a basement can often be far more subjective, especially when there are extravagant features such as a home theater, custom bar, or a personal gym. While a nice finished basement can substantially upgrade the square footage and features of a home, the value of the basement space will still only be worth a fraction of what similar space upstairs would be. 

3. Improvements are not always as valuable as you'd expect. 

Home improvements and additions must be of similar value to other homes in the area to be valued as you would expect. No matter how nice, the appraiser will not value the improvements significantly higher than the same improvements in the other homes in the area. One of the biggest misconceptions among homeowners is that there is a 1:1 return on home improvements. That is almost never the case. More often than not it takes years to get full cost or more from making improvements. 

4. The market is moving too quickly

Oftentimes, a reason appraisals come in low is because of the real estate market getting too ahead of itself. If homes are selling rapidly and at increasing prices in your area, this will likely lead to bidding wars where the final price ends up tens of thousands of dollars over the asking price. These bidding wars can cause major dilemmas for an appraiser.

5. The buyer had no guidance on what to offer.

Every day there are thousands of properties that have price reductions, and it only means one thing: the home was not priced appropriately. The seller was overzealous, or perhaps the agent promised the moon in hopes to make a sale. In states where dual agency exists, a buyer will occasionally go directly to the listing agent. They don’t have a buyer’s agent in their corner guiding them, and they end up significantly overpaying for the property. When purchasing a home, it always makes sense to have a buyer’s agent representing your best interests. Don’t be conned by dual agency. 


Appraisals By Michael is a leading full-service appraisal firm with extensive knowledge of the real estate valuation process. We specialize in numerous types of appraisal services, including property (commercial and residential), bankruptcy, divorce, immigration, relocation, and estate matters throughout metro Atlanta's $477 billion real estate market. With 20 years of experience in the real estate market, our appraisers work to provide excellent valuation and consulting services to homeowners, financial institutions, law firms, and accounting firms. Our state-of-the-art appraisal methods allow us to provide customized, detailed reports within 1 to 2 business days, helping to simplify your appraisal experience with accuracy and expertise.

For a full list of services, please visit our Services page. For a list of our coverage areas, please visit our Coverage Area page.

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Posted by Anne-Marie Boring on January 14th, 2020 1:30 PMPost a Comment

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