Blog: appraisalhub.ca How to Challenge a Low Residential Appraisal: Steps and Rights Picture this: you just found your dream home in Toronto. It is close to your job, the neighbourhood has great amenities, and the kids’ school is a five -minute drive away. Everything seems perfect, and you are ready to sign your name in the mortgage and officially make the place yours. But after some concerning calls from your lender, it turns out that the home appraisal value came in too low. This means that the bank will not lend you the full listing price, but rather something lower. You are left with two options: either accept the low appraised value and pay the remaining difference in cash, or attempt to dispute the appraisal. This article outlines your rights and steps for challenging a low residential appraisal, empowering you to make the best decision for your situation. Reasons Behind a Low Appraisal First things first is to understand what went wrong and led to a low residential appraisal. Here are some of the most common reasons to a low appraisal value: Not Enough Comparable Sales in the Area A lack of recent sales of similar properties nearby may force the appraiser to use unideal comparables. These substitutes might differ significantly in factors like land size, property condition, or the number of bedrooms and bathrooms, leading to a lower benchmark for comparison with your desired home. Blog: appraisalhub.ca Property Listed Too High In some cases, sellers might end up overestimating the value of their property when listing it. Pushing the value up too much without an adequate justification can make the home appraisal company estimate its real value at a considerably lower price. Rookie Mistake From the Appraiser: If you are working with a reputable appraiser, this is rather rare. However, it is important to double check that the information in the appraisal is accurate. Double-check details such as amenities, the number of bedrooms and bathrooms, and the overall description of the property. For more on this we wrote an article on key factors that influence an appraisal. How to Dispute a Low Appraisal If you decide to dispute the appraised value, the exact procedure may vary slightly based on your lender and the appraisal company they use. Nevertheless, the following are the general steps you will need to take when appealing the appraisal: Ask for a copy of the appraisal report if possible: This is crucial in order to determine what went wrong and how to appeal it. Review the report: Once you have the copy, review the information making sure it matches that of the actual property. We recommend working with an experienced agent during this review process. Find good comparable sales: Comparable sales provide a ground and a ceiling for the value of the appraised property. If you believe that the sales used by the appraiser are substandard, you should find recent sales that match better your desired property. Request an appraisal revisit: After compiling your supporting documentation, you can formally ask the lender for an appraisal revisit. Be sure to submit all the evidence that justifies a higher appraisal value. Dealing with a Low Appraisal Appealing the appraisal does not guarantee a win. If that is the case, don’t worry there are still other options available: Negotiate with your seller to lower the purchase price to better match the appraised value Pay the remaining value in cash or get an additional loan to cover the remainder. Obtain a second appraisal from a different appraiser firm. This often means working with a different mortgage lender. Need a Second Opinion on Your Appraisal? Don't settle for less. If you need an experienced appraisal company in Toronto, look no further. Appraisal Hub's certified experts deliver unbiased, accurate valuations to help you secure your dream home. Call us today at 1-888-728-8482 and let's get started!