A low home appraisal can derail a home sale.
But why, exactly, might an appraisal come in low?
A recent article from realtor.com outlined the top reasons an appraisal might come in low, including:
The appraiser didn’t use realistic comps. Appraisers rely on “comps” — or how much similar homes have recently sold for — when appraising a home. But appraisers don’t always do a deep dive on the comps they pull, so if they happen to choose homes that sold under market value (for example, because the property had a mold issue or the owners were getting divorced and were eager to sell), it could cause them to appraise your home under market value as well.
The appraiser missed the view. If your property has a killer view, especially when compared to other homes nearby, it generally will drive up the value of your home. But if the appraiser misses the view, they won’t include it in the appraisal, and it may come in lower than expected as a result. Moral of the story? If there is an epic view on the property, make sure your appraiser knows about it!
Your home’s value is in the basement. If you spent a ton of time, energy, and money on renovating your basement — for example, doubling your square footage and adding a bedroom, bathroom, and living space — you would think it would increase your home’s appraisal. But unfortunately, appraisers have to use a significantly lower value per square foot when that square footage is below ground level. So if a lot of your home’s value is in the basement, your appraisal may come in lower than expected.