Is It Possible to Negotiate Property Appraisal Rates in Contested Cases?

While property appraisal rates are generally considered to be the professional opinion of an appraiser, it is possible to challenge or contest an appraisal in certain situations, particularly if there is a discrepancy or if the property owner or buyer believes the appraisal is inaccurate. However, negotiating the actual appraisal rate is not typically feasible, as appraisers are bound by ethical standards and guidelines to provide an unbiased, market-driven assessment of the property’s value. That being said, there are steps you can take to dispute or re-evaluate an appraisal, especially in contested cases, and there are circumstances where negotiation or further action can lead to a revised valuation.

Steps to Take in Contesting or Challenging an Appraisal:

1. Review the Appraisal Report

The first step in disputing a contested property appraisal is to thoroughly review the appraisal report. Appraisers are required to follow strict guidelines and provide detailed reasoning for their valuation. Key areas to review include:

• Comparables (Comps): Compare the appraiser’s chosen comparable properties (comps) with those that you believe better reflect your property’s value. If the appraiser used outdated or irrelevant comps (in terms of location, condition, or sale price), this could be a basis for contesting the appraisal.
• Property Condition and Features: Ensure that the appraiser accounted for the actual condition of the property, including any renovations, upgrades, or unique features that may add value. If the report overlooks or misrepresents these aspects, it may be worth challenging.
• Errors or Omissions: Check for any factual errors in the appraisal, such as square footage discrepancies, incorrect property descriptions, or missed upgrades. These errors can affect the final valuation.

2. Request a Reconsideration or Reappraisal

If you believe the initial appraisal is incorrect or unfair, you can request a reconsideration of value or a second appraisal. The process for doing this depends on the type of appraisal:

• For a mortgage or refinance appraisal: If you're contesting an appraisal in the context of a home purchase or refinancing, you can ask your lender to order a second opinion or review of the appraisal. Some lenders allow for an appraisal review process where you can submit evidence or point out discrepancies in the initial appraisal.
• For property taxes: If the appraisal is related to property taxes, you can typically appeal the property tax assessment through your local tax assessor's office or appeal board. This process may allow you to present evidence, such as recent sales data, to argue that the appraised value is too high.

3. Provide Supporting Evidence

If you are contesting the appraisal, it’s essential to gather supporting evidence to bolster your case. This might include:

• Recent Comparable Sales: Provide information on recent sales of similar properties that may have been overlooked by the appraiser or that demonstrate a different value for the property.
• Independent Appraisals: Hire another professional appraiser to conduct an independent appraisal. While the second appraisal will not automatically override the first, it can serve as useful evidence if you choose to appeal or present your case to the lender, tax authority, or court.
• Home Inspection Reports: If the appraisal missed significant defects or issues that could affect the property’s value, such as structural problems or needed repairs, presenting a home inspection report can strengthen your case.

4. Appeal the Appraisal

If the reconsideration or reappraisal process does not lead to a satisfactory outcome, you may have the option to formally appeal the appraisal. Depending on the situation, this could mean:

• Appealing a Tax Assessment: If the contested appraisal relates to property taxes, you can usually appeal the tax authority's decision to an appeals board or board of review. This often requires presenting evidence to demonstrate why the assessed value is too high.
• Challenging an Appraisal in Court: In extreme cases, you may choose to challenge the appraisal in court, particularly if there was negligence or misconduct on the part of the appraiser. This is often a last resort, as legal action can be time-consuming and expensive.

5. Negotiate with the Seller or Lender (in Some Situations)

While you can’t negotiate the appraisal value itself, if you are purchasing a property and the appraisal comes in lower than expected, there may be room for negotiation in the following ways:

• With the Seller: If a low appraisal affects the sale, the buyer may try to negotiate with the seller to lower the sale price to match the appraisal. In some cases, the seller may agree to reduce the price to keep the deal moving forward.
• With the Lender: If you’re refinancing or purchasing a home, you might be able to work with your lender to find ways to proceed with the loan despite a low appraisal. This could include increasing your down payment, or the lender may allow you to proceed with the loan on a case-by-case basis even if the property doesn’t meet the appraised value.

6. Check for Bias or Conflicts of Interest

If you suspect the appraisal is biased or was conducted by someone with a conflict of interest, you can file a complaint with the appraisal regulatory agency in your state or with the Appraisal Subcommittee (ASC). The appraiser’s behavior could be subject to review, and if misconduct is found, the appraisal may be overturned or the appraiser may face disciplinary action.

Example:

Suppose you’re purchasing a home and the appraisal comes in $20,000 below the sale price. After reviewing the report, you realize the appraiser used outdated comparables and didn’t account for a recently completed renovation. You gather new comparable sales and provide them to your lender for a reconsideration. The lender reviews the evidence and agrees that the appraisal value was too low, allowing the loan to proceed at the agreed-upon sale price. Alternatively, if you were in a tax dispute, you could appeal the tax authority’s assessment, presenting the same evidence to argue that the property’s value is overstated.

Conclusion:

While it’s generally not possible to negotiate the actual rate or value set by an appraisal, it is certainly possible to contest or challenge the appraisal through various channels such as reconsideration, requesting a second opinion, or appealing to local authorities. By reviewing the appraisal report carefully, gathering supporting evidence, and following the correct procedures, tenants, property buyers, or owners can address discrepancies and ensure the property value is accurately reflected. In contested cases, acting promptly and with the right evidence is key to resolving any disputes effectively.