363: What to Do When the Appraisal Comes In Low

Three low appraisals. Ten days. And one of us used to be an appraiser, with a dad and a sister still working in the field. If you have ever wondered how to dispute a low appraisal, or if you have just been hoping you never have to figure it out, this episode is your real-world walkthrough.

We keep hearing agents in different markets say the same thing right now: appraisals are coming in low. There is a reason for that. Appraisers work from past sales, not what is currently happening in the market, so when things shift quickly in either direction, the numbers can lag behind reality. That gap is exactly what Alissa ran into three separate times in the same ten day window, and she walked us through every single one.

Case Study #1: The $20,000 Gap

The first house was clean, well decorated, and priced on the higher end of the comps after a very intentional conversation at the listing appointment. A buyer fell in love before the home even officially hit the market and wrote a full price offer, which meant the price never really got tested against the open market. When the appraisal came back $20,000 under contract, the two hour dispute process began. Comps were pulled, photos were compared side by side, and every adjustment was questioned. The result: the appraiser came up $7,000, closing the gap to $13,000, a number the sellers were prepared for because of an email recap sent right after the listing appointment.

What Actually Goes in a Dispute Letter

This is the part every agent needs to hear. A strong appraisal dispute is written with zero emotion. No feeling words, no “I believe this house is worth,” none of it. It has to read like a factual case: here are the comps that should have been used, here is the documented error, here is the data. Alissa mentioned reading her own dispute letters five times before sending, because you can be firm without ever sounding defensive.

One important note for anyone tempted to lean on AI here: ChatGPT can help you organize your thoughts, but it does not know that the “outdoor kitchen” the appraiser gave credit for does not actually exist, or that a comp everyone assumed had a pool actually does not. That kind of fact-checking still has to come from you.

Case Study #2: The Small Gap Nobody Disputed

Not every low appraisal is worth fighting, and this case study proves it. A $3,000 shortfall on a home in a high-inventory neighborhood led the seller to simply lower the price rather than dispute, since plenty of other comps could have supported a stronger number if it had come to that. The buyer was not thrilled about giving up any closing costs, but ultimately the numbers worked out better than expected for everyone at the table.

Case Study #3: The $55,000 Appraisal Gap

This is the one that made Alissa question everything. A home under contract at $825,000 came back appraised at $775,000, a $55,000 difference with almost no comparable homes in the size range to lean on. The dispute took hours: identifying an actual factual error (a comp that did not have a pool, despite being noted as having one), and building a case for a higher price-per-square-foot adjustment appropriate for a custom, luxury neighborhood instead of the more conservative number typically used in starter home communities. The appraiser came back up $30,000, landing at $800,000, still a $25,000 gap from the original contract price, and a genuinely hard phone call to make.

What This Means for You as the Listing Agent

The common thread across all three case studies was not the size of the gap. It was the conversation that happened weeks earlier at the listing appointment. Setting realistic expectations, documenting the comps discussed, and being honest that anything can happen between listing and closing made every one of these hard phone calls easier to deliver. As Katy put it, you are not the villain in this story. You are the messenger with data, doing everything possible to fight for a fair outcome.

If you want the exact language used in each dispute letter, plus a deeper walkthrough of how to dispute a low appraisal step by step, this episode is worth the full listen.

Here’s what we cover in this episode:

Why appraisals are coming in low right now, and why appraisers are always a little behind the market
Case Study #1: the $20,000 low appraisal that got resolved for a $13,000 gap
Exactly how to start an appraisal dispute (and why you review before you call your seller)
What actually goes in a dispute letter: facts only, no feeling words
Why you can’t rely on ChatGPT to write your dispute for you
Buyer and seller options when an appraisal comes in low, and who really has to sign off
Case Study #2: the small $3,000 gap where the seller chose not to dispute at all
Case Study #3: the $55,000 appraisal gap that took two of the longest dispute letters of the week
How to set your sellers’ expectations at the listing appointment so a low number doesn’t blindside them
Why you’re just the messenger with data, and how to keep that from feeling personal

Key Quotes & Takeaways:

“It needs to be written as factual. Only the facts.” – Alissa
You have to know these houses. If the appraiser makes a mistake, the computer doesn’t know it’s a mistake.” – Alissa
“You’re just a messenger with data.” – Katy

Products, People & Previous Episodes Mentioned: