If you are considering a reverse mortgage, it is important to understand that your home must be appraised by an FHA-approved appraiser.

The appraisal is thorough, but there is no need for concern. The appraiser will inspect the entire property, take measurements to confirm the home’s size, and review key features and overall condition. This also includes a simple head-and-shoulders look into the attic. In most cases, the appraiser will open the attic access, briefly look inside, and check for any obvious issues. They are not crawling through the attic.

Keep in mind that the physical inspection is only part of the process. Much of the work is completed before the appraiser ever arrives. They will research recent sales in your area and compare similar homes to determine your home’s market value. Because of that preparation, the visit itself is often more straightforward and does not usually take very long.

Did You Know? Every FHA reverse mortgage requires an appraisal from an FHA-approved appraiser — not just any appraiser a lender chooses.

How reverse mortgage appraisal disputes, laws, and appeals work

Evolution of HUD Appraisal Laws

To understand how appraisals are handled today, it helps to look at how things worked before the housing crisis.

Before 2008, lenders could order an appraisal from almost any appraiser they chose. If they felt the appraiser was unresponsive or disagreed with the value, they could request a second appraisal from another appraiser.

HUD required that once an appraisal was completed, it be logged into its system. However, in practice, that step was not consistently applied. In some cases, lenders or brokers may seek multiple opinions if they are not satisfied with the initial valuation. This practice became known as “appraiser shopping.”

When the housing market collapsed, many properties were found to have been significantly overvalued. Lawmakers, regulators, and agencies began asking serious questions. Appraisers testified that their income often depended on maintaining relationships with lenders. Some stated that if they did not meet expected values, they risked not being paid or losing future assignments. That created pressure in the system.

As a result, major changes followed.

Beginning in 2010, Fannie Mae, Freddie Mac, HUD, private investors, and both state and federal regulators implemented what became known as Appraiser Independence Rules and Laws. These rules were designed to protect the integrity of the valuation process.

Under these standards, anyone involved in a mortgage transaction secured by a consumer’s primary residence is restricted from influencing, pressuring, or attempting to manipulate the appraised value. Lenders can no longer simply replace an appraiser because they disagree with the outcome.

Today’s appraisal process is far more structured and independent than it was prior to the housing crisis. These changes were implemented to protect homeowners and ensure that property values are supported by data rather than pressure.

Did You Know? Before 2010, lenders could “shop” for appraisers who gave higher values. New federal and state laws now make that illegal.

The law is written as such:

(a) In general, it shall be unlawful, in extending credit or in providing any services for a consumer credit transaction secured by the principal dwelling of the consumer, to engage in any act or practice that violates appraisal independence as described in or pursuant to regulations prescribed under this section. (b) Appraisal independence for purposes of subsection (a), acts or practices that violate appraisal independence shall include— (1) any appraisal of a property offered as security for repayment of the consumer credit transaction that is conducted in connection with such transaction in which a person with an interest in the underlying transaction compensates, coerces, extorts, colludes, instructs, induces, bribes, or intimidates a person, appraisal management company, firm, or other entity conducting or involved in an appraisal, or attempts, to compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate such a person, for the purpose of causing the appraised value assigned, under the appraisal, to the property to be based on any factor other than the independent judgment of the appraiser; (2) mischaracterizing, or suborning any mischaracterization of, the appraised value of the property securing the extension of the credit; (3) seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction; and (4) withholding or threatening to withhold timely payment for an appraisal report or for appraisal services rendered when the appraisal report or services are provided in accordance with the contract between the parties.

What Is NOT Allowed

Under today’s laws, the appraiser must remain completely independent. That protection is not optional. It is required by federal and state law.

Neither the lender nor the homeowner may “suggest” a value to the appraiser. We cannot hint at what we believe the home should be worth. We cannot pressure, guide, or attempt to influence the outcome in any way. Even providing a target value would violate appraisal independence laws.

Appraisers are not only instructed to reject such influence but also required to report it.

Over the years, I have spoken with borrowers who were disappointed with an appraised value and wondered whether we somehow influenced it. I can tell you plainly that doing so would jeopardize our licenses in every state where we operate. It would jeopardize our HUD approval and expose us to penalties of up to $10,000 per day per violation.

Simply put, inflating or deflating a home’s value would put us out of business. We do not suggest values, and we cannot legally.

What Is Allowed

There is an important distinction here.

The law allows us to request corrections for factual errors. For example:

  • If the square footage is incorrect
  • If the number of bedrooms or bathrooms is wrong
  • If a comparable sale was overlooked
  • If there is additional documentation that the appraiser did not consider

We may ask for a reconsideration of value if new, relevant information is provided. That is not considered interference. It is part of ensuring the report’s accuracy.

The key difference is this: correcting facts is permitted. Pressuring for a specific value is not.

These safeguards were created after the housing crisis to protect homeowners and maintain trust in the system. While it can be frustrating if a value comes in lower than expected, the independence of the appraisal process is there for everyone’s protection.

Did You Know? Suggesting a value to an appraiser, even casually, can result in fines of up to $10,000 per day and loss of a lender’s license.

That portion of the law appears below:

(c) Exceptions. The requirements of subsection (b) shall not be construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, consumer, or any other person with an interest in a real estate transaction from asking an appraiser to undertake 1 or more of the following: (1) Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal. (2) Provide further detail, substantiation, or explanation for the appraiser’s value conclusion. (3) Correct errors in the appraisal report

Reconsideration Requests in Appraisal Disputes

Suppose the appraiser is completely negligent or negligent in their duties. In that case, we can seek a new appraisal, but this is not available simply because you don’t like or disagree with the value.

In those cases, you can register complaints with the licensing board in the state in which the appraiser is licensed and can file a grievance with HUD. We can request a new appraisal in cases of particularly egregious appraiser malfeasance.

If you believe your home’s value exceeds the appraiser’s assigned value, you can only refute this conclusion by requesting reconsideration within the law’s parameters.

Did You Know? You can only dispute an appraisal with facts, like overlooked comparable sales, not opinions about your home’s upgrades or features.

What to Do When You Disagree with the Appraiser’s Evaluation

If you ask the appraiser to correct errors (the appraiser said your home is 2800 square feet, and you think it is 2900 and therefore worth more), the appraiser may disagree with you, find other information from old appraisals where other appraisers also concluded very similar square footage, shake it off due to rounding of different measurements or even change the report but state that the additional 100 square feet does not affect the value.

If you disagree with the appraiser on the value of the amenities (the view, upgrades, landscaping, etc.), this is a difficult argument to win. Unless you have additional sales of homes that the appraiser did not use in the report. The amenities are similar to yours, with no significant differences. It is your opinion vs. the appraiser’s.

Personal Opinions in Appraisal Reconsiderations

You are an interested party to the transaction and typically are not a licensed appraiser approved by HUD.

Therefore, your opinion is unqualified and biased. This is no insult. My opinion on my home and its value is biased. The best chance of obtaining a reconsideration of value is to provide additional comparable properties that support a higher value than the appraiser considered.

When doing this, it is important to remember that the appraiser will not consider one floor plan more desirable than another, nor will they consider other factors you believe everyone in your neighborhood “knows” that add value, unless there are sales to support those claims.

In other words, if you live in a tract of homes where the builder built one model with open concept and higher ceilings that sold for more when the tract opened 15 years ago, but all the recent sales indicate that they are now selling for about the same prices, the appraiser will not consider the premiums that the one-floor plan brought when the models first opened.

How to Strengthen a Reconsideration Request

If you believe the appraised value should be higher, the most effective approach is to provide additional comparable sales that support your position.

Those comparable properties should:

  • Be recent closed sales
  • Be similar in size, age, and condition
  • Be located as close to your home as possible
  • Show clear support for a higher market value

This type of factual, data-driven information provides the appraiser with an objective basis for review.

What Appraisers Cannot Use

It is also important to understand what an appraiser cannot rely on.

They cannot base their value on what “everyone knows” about the neighborhood. They cannot assume one floor plan is more desirable unless recent sales prove it. They cannot rely on what a particular model sold for 15 years ago when the subdivision first opened.

For example, if one model originally sold for a premium because it had higher ceilings or an open layout, but recent comparable sales show all models are now selling for similar prices, the appraiser must follow the current market data. Past builder premiums do not automatically carry forward unless supported by today’s sales.

The Bottom Line

Appraisals are built on documented, verifiable market evidence. When requesting a reconsideration, facts and comparable sales carry weight. Personal preference and historical pricing do not.

Understanding that distinction can make the process clearer and more productive for everyone involved.

Importance of Providing Sales Data in Home Valuation Disputes

If you believe your home should be valued higher because of a specific floor plan, location within the tract, or proximity to a different phase of construction, you must be able to support that belief with actual closed sales.

For example, if you feel your model is more desirable than another model in the same neighborhood, the strongest evidence would be recent sales showing that homes with your floor plan consistently sold for more than the competing plan. If you believe your section of the tract commands higher prices than a nearby development built a quarter mile away, there should be recent comparable sales that demonstrate that price difference.

Without that data, it becomes very difficult to persuade an appraiser that their opinion of value is incorrect. Appraisers are required to base their conclusions on documented, closed sales. If those sales do not exist, they cannot assume a premium.

Why the Lender Has No Reason to Suppress Value

Occasionally, a homeowner will suggest that we, as the lender, might prefer a lower value than the borrower expected. Let me explain clearly why that does not make sense.

The reverse mortgage is insured by HUD. The amount available to you is directly tied to the appraised value and HUD’s lending formulas. A higher supported value generally allows for greater loan proceeds, benefiting the borrower and increasing the loan size.

There is no incentive for a lender to influence an appraisal downward. More importantly, we are legally prohibited from attempting to influence the appraiser. Doing so would violate federal law and jeopardize our ability to operate.

In short, the appraisal must be supported by market data. When disputing a value, comparable sales are your strongest and most credible tool.

Lenders Don’t Benefit from Low Property Appraisals

We use an FHA appraiser (whom we don’t even get to pick, with whom we have no relationship, and by law to whom we cannot even suggest a value), and if there is a default on the loan and we have followed all the rules, HUD pays for the losses out of the insurance fund.

We have no incentive to lower the value because we are not personally at risk of default. Holding down your value would not save us anything, and it hurts you and us when the lending process becomes bogged down in valuation issues.

Things would be much smoother if every appraisal went smoothly and every value met the borrowers’ expectations. Every time a value comes in low, there is a risk that the borrower may not be able or willing to close the loan.

This represents significant work and costs we cannot recoup if the loan cannot be closed.

Presumably, this is why HUD took the valuation process out of the originator’s hands in the first place: they were convinced that some originators were overly motivated to find a way to bring values in, whether or not they were supported.

The appraisal of your home is a snapshot in time. The appraisal is one person’s opinion of value based on comparisons with recently sold homes.

There are Uniform Standards of Professional Appraisal Practice (USPAP; find USPAP information here) that all appraisers must follow, and additional rules for FHA appraisals that appraisers must also adhere to.

If you do not like or agree with the value even after you have disputed the value as allowed by law and have exhausted all avenues, you can always cancel the loan, wait for the appraisal to expire, and reapply, but HUD will not allow a new appraisal until after the first appraisal is over 120 days old.

However, there is a fundamental point you need to know: the rules apply to all lenders.

Did You Know? Lenders have no reason to push values down. Reverse mortgages are HUD-insured, meaning lenders are reimbursed if a loan defaults.

Why a New Appraisal Won’t Necessarily Solve Valuation Issues

HUD has required appraisal logging for several years, but it has taken a further step in the past year. Every FHA appraisal is submitted to HUD before it is returned to the lender via the HUD Electronic Appraisal Delivery Portal (EADP).

HUD reviews the appraisal through EADP before the lender does, and it is linked to the case number and the borrower’s property. Any new lender must also use the same appraisal for as long as it remains valid.

Once the appraisal expires, all lenders must order a new appraisal, and there is no guarantee of the next value. If sales support a higher value on the next attempt, the next appraisal may, in fact, come in higher, but only a new appraisal can confirm.

After all, it, too, is an opinion of value and a snapshot in time, so it would depend on the sales at that time and the appraiser’s opinion based on the information available at the time.

Additional sales may occur after the initial 4-month period, supporting a higher valuation. It may be that a different appraiser sees things differently, but there is no guarantee that a new appraisal will yield a higher value. If any originator tells you they can get a higher value, they are not honest with you about their role in the valuation process, what they can and cannot do, or when.

Did You Know? Once an FHA appraisal is logged into HUD’s system, it follows the case number. Switching lenders won’t get you a new appraisal until 120 days have passed.

The Final Word: Understanding Lender Limitations and Appraisal Disagreements

But the bottom line is that the lender has no control over your appraised value, which is by design and by law. If we did, we certainly wouldn’t want the values to come in low, only to invest significant time, energy, and costs, only to see your loans not close.

After all, we are not in the business of processing loans and then letting them lapse.

If you disagree with the appraised value, you can rebut it with bona fide sales that support a higher value. Alternatively, you can cancel and restart the loan process later if you believe it would be more advantageous.

You can even file complaints with the state licensing board that licenses the appraiser or with NFHA, since they approve the appraiser for FHA appraisals, if you feel the appraiser has acted illegally or unethically, but please don’t ever think that if your lender can’t find any additional sales to support a higher value, they want the value to be lower.

And please don’t mistake our explanations of the appraiser’s viewpoint or our limitations under the laws and rules as our siding with the appraiser — it’s our job to let you know what is happening and whether we can reasonably expect a different outcome based on our research.

If the time comes when we can no longer support a reasonable argument for reconsidering the value, it’s our job to tell you as well, so you can make an informed decision.

Common Appraisal Rebuttal FAQs

Q.

How do you rebut a low appraisal?

If you believe that the appraisal on your home has come in lower than it should have, you can submit a Reconsideration of Value (ROV), also known as a rebuttal. To submit a proper rebuttal for consideration, you need to provide up to 3 closed sales that the appraiser did not use that are as similar to your home as possible when it relates to size, age, condition, amenities, etc. These sales should be recently sold and close to your home (preferably in the same neighborhood). You want to avoid using home sales that are too far away to be considered the same neighborhood or area, much larger homes, or homes that are significantly upgraded. Additionally, if the appraiser makes any factual errors regarding square footage, lot size, upgrades, or other details, include them in a write-up for review. It’s always best to stick to facts only when submitting a rebuttal and avoid opinions.
Q.

Do appraisers ever change their appraisals?

In our experience, appraisers will revise their appraisal if it is shown that they made an error or overlooked a stronger comparable sale for your home. Successful rebuttals occur when there is verifiable evidence of something overlooked by the appraiser. A difference of opinion is just a difference of opinion, and that will not lead to a successful rebuttal.
Q.

Can I get a new appraisal if the first appraisal is too low?

When you are attempting to obtain a reverse mortgage loan, a new appraisal cannot be obtained if you believe the first appraisal is too low. All appraisals are submitted to HUD via the Electronic Appraisal Delivery (EAD) portal and are attached to your FHA case number. You can only have 1 FHA case number at a time. If you are dissatisfied with the appraisal, you may request a reconsideration of value as noted previously, but you cannot obtain a new appraisal unless you wait for your existing appraisal and FHA case number to expire, which does not occur until 180 days have elapsed since the date of the appraiser’s inspection.
Q.

What happens if an appraisal rebuttal is unsuccessful?

If an appraisal rebuttal is unsuccessful, you have a couple of options that you can pursue. You can proceed with the loan at the appraised value shown in the report if it still works for you, or cancel the loan and let the appraisal expire. Once the appraisal expires, you may reapply with a new application, an FHA case number, and a new appraisal. Keep in mind that letting an appraisal expire is a lengthy process with no guarantee that the next appraisal will be more favorable to you, as market conditions can change in 6 months.
Q.

What are my options if an appraisal comes in lower than the purchase price?

If an appraisal comes in lower than the previously agreed-upon purchase price, you have a few options to consider. First, present the appraisal results to the seller’s agent to renegotiate the purchase price. It is advisable to include an appraisal contingency in any purchase transaction to allow you to back out of the deal if the value does not meet the purchase price and to recoup your earnest money deposit. If the seller does not agree to reduce the purchase price, you can proceed and pay the agreed-upon price, even if the home did not appraise at that level. This is a risky option, but if the amount is minimal, some people may choose to do so. Keep in mind that any loan amount will be based on the lower of the purchase price and the appraised value, and some lenders will not permit a loan if the purchase price exceeds the appraised value by an amount they deem egregious. Lastly, you can cancel the contract if the seller is unwilling to renegotiate based on the appraisal results. The ability to recoup your earnest money deposit depends on the contract’s terms and whether you are within your contingency period.

Appraisal Not What You Expected? Get expert guidance from All Reverse Mortgage, Inc. (ARLO™) — America’s #1 Rated Lender with a 4.99/5-star rating! Call (800) 565-1722 or click here for your free quote — simple, trusted, 100% secure!

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