Home Appraisal Appeals: Everything You Need to Know About the Reconsideration of Value Process

Home appraisals are essential in the process of buying, selling, or refinancing a property. They determine your home’s market value, impacting the terms of loans, borrowing limits, and even whether a loan is approved at all. But what happens if an appraisal doesn’t seem accurate? Whether undervalued or overvalued, an incorrect appraisal can disrupt your finances and plans.

If you believe your appraisal doesn’t reflect your home’s true value, there’s a process in place for appealing this decision: the Reconsideration of Value (ROV). Here, we’ll break down why accurate appraisals matter, how to initiate an ROV, and the essential steps to ensure a fair evaluation of your home’s worth.

Why Does an Accurate Appraisal Matter?

Appraisals are foundational to the real estate financing process. They establish the fair market value of a property, which then influences:

• Loan approval and amount: Lenders base the loan amount on the appraised value. If the appraisal is lower than expected, it may result in a reduced loan or, in some cases, no approval at all.
• Equity access: If you’re refinancing or seeking a home equity line of credit, a low appraisal could limit your ability to leverage your home’s equity.
• Home affordability: Overvalued appraisals may cause buyers to borrow more than a property’s true worth, leading to financial difficulties or issues in reselling or refinancing later.

Consequences of Inaccurate Appraisals

An incorrect appraisal can have a lasting impact. An overvalued appraisal inflates the property’s price, making it more challenging for buyers to secure financing, potentially derailing sales. Conversely, an undervalued appraisal limits the equity homeowners can access and can even block a sale if buyers can’t obtain the necessary loan approval.

The good news is that you can appeal an inaccurate appraisal through an ROV. The Consumer Financial Protection Bureau and other regulatory agencies require lenders to offer consumers a clear and straightforward appeal process.

What Is the Reconsideration of Value (ROV) Process?

The Reconsideration of Value, or ROV, is a formal way to request a review of your appraisal if you believe it’s inaccurate. This process is available to both homebuyers and homeowners, whether you’re buying a new home, refinancing, or seeking an equity loan.

How the ROV Process Works

1. Receiving the Appraisal and Disclosure: When you apply for a loan, the lender provides an appraisal and a disclosure outlining how to appeal. This is your first step in understanding the appeal process and preparing the necessary information.
2. Gathering Evidence: To make a solid case, gather data that supports a different valuation, such as recent sales of comparable properties or market information indicating changes in your area’s real estate values.
3. Submitting the ROV Request: Using the form provided by your lender, submit your evidence and formally request a reconsideration of value.
4. Awaiting a Response: The lender will communicate your request to the appraiser. The response time typically ranges from a few days to a few weeks, depending on the appraiser’s schedule and the complexity of your appeal.

Step-by-Step Guide to Appealing a Home Appraisal

Step 1: Collecting Evidence

The strength of your appeal rests on the quality of evidence you provide. Useful data includes:

• Comparable sales data: Identify homes recently sold in your area that are similar in size, condition, and location. These comparables, or “comps,” provide a basis for a revised valuation.
• Documenting renovations or upgrades: If you’ve made recent improvements to the property, such as adding a new room, remodeling, or updating the exterior, include these details as they may increase your home’s value.
• Market data: If your neighborhood has seen recent growth or shifts, gather local market information that may show a discrepancy between the appraisal and actual home values.

Step 2: Notify Your Lender

Once you’ve collected your evidence, contact your lender to let them know you want to initiate the ROV process. They will provide you with instructions, forms, and important timelines.

Step 3: Submit Your Appeal

Complete the ROV request form and attach all supporting documentation. This includes the comparable sales data, documentation of property upgrades, and any relevant market data.

Step 4: Wait for the Response

After submitting your request, the lender will forward your materials to the appraiser. While waiting for a response, you can check with your lender for updates. Most responses come within a few weeks, though this may vary depending on the complexity of your appeal.

Common Errors Leading to Inaccurate Appraisals

Appraisals can contain errors, especially if there were overlooked details or if the appraiser used outdated information. Here are some common pitfalls that could lead to an inaccurate appraisal:

1. Misuse of Comparable Sales: Appraisers sometimes select comps that don’t closely match your property’s unique attributes, leading to an inaccurate valuation.
2. Missing Recent Upgrades or Renovations: If recent improvements to your property weren’t accounted for, the appraisal may undervalue your home.
3. Relying on Outdated Market Data: In fast-changing markets, using old data can result in a valuation that doesn’t reflect current property values.

By being aware of these common errors, you’ll be better prepared to appeal your home’s appraisal and secure a fair evaluation.

How Long Does the ROV Process Take?

While timelines can vary, the ROV process typically takes a few days to a few weeks. The length depends on factors such as:

• Complexity of the appeal: If the appraiser needs to conduct further research or revisit the property, the process may take longer.
• Communication standards: Lenders are required to provide an estimated response time, so ask for an update if you haven’t received a reply within the expected timeframe.

Potential Outcomes of the ROV Appeal

Once your ROV request is submitted, there are three primary outcomes:

1. Value Adjustment: If the appraiser agrees with the evidence, they may adjust the valuation up or down.
2. No Change: The appraiser might stand by the original appraisal if they feel the new information doesn’t support a change.
3. Additional Options: If you’re still unsatisfied with the result, consider seeking a second opinion or contacting a regulatory agency to discuss further options.

Final Thoughts on Challenging a Home Appraisal

The home appraisal process plays a crucial role in real estate transactions, but it doesn’t have to be the final word on your property’s value. Through the ROV process, you can challenge an appraisal that doesn’t seem accurate, potentially saving thousands of dollars and preventing future financial headaches.

If you’re thinking about appealing a home appraisal or just want more information about the ROV process, book an appointment with me or my team—we’ll walk you through every step to ensure your home’s value is represented fairly.