Whether you’re a referral partner, homebuyer, seller, or someone who has been through the mortgage process before, chances are you’ve either experienced this situation firsthand—or know someone who has.
But there is some encouraging news, so keep reading.
A buyer gets pre-approved for a mortgage, connects with their trusted Real Estate Agent, and begins the exhausting search for the perfect home in a market with limited inventory. After countless showings, negotiations, and emotional ups and downs, they finally find the one.
The offer is accepted. The contract is signed. The loan process is moving forward. Everyone is preparing for closing day…
And then suddenly: “The appraised value came in below the contract price.”
Few things can derail momentum faster than a low appraisal. What should be an exciting experience suddenly becomes stressful, frustrating, and uncertain for everyone involved.
In some cases, a skilled Real Estate Agent can successfully renegotiate the sales price and keep the transaction together. Sometimes all parties agree to compromise. But in many situations—especially in competitive markets—it creates a stand-off between buyer and seller.
The difficult part is that buyers often still want the home and believe the agreed-upon sales price is fair. The challenge is that they may not have enough cash available to cover the difference between the appraised value and the contract price.
That’s usually when I hear: “Call the appraiser and tell them to increase the value!”
Unfortunately, it doesn’t work that way.
Following the housing crash and financial crisis of 2008, new regulations were introduced in 2009 to eliminate collusion and undue pressure between parties in a transaction and appraisers. These rules were necessary to help protect the integrity of the housing market.
As a result, loan production staff—including Loan Originators and Processors—were prohibited from directly contacting appraisers regarding value disputes.
While the intention was good, many in the industry felt it also created unintended consequences. Without a clear process to challenge questionable valuations, some believed accountability diminished and appraisers began leaning more conservatively. In some cases, transactions fell apart after weeks—or even months—of hard work by buyers, sellers, agents, and lenders.
Now, there’s a bit of good news.
Regulators have recently opened the door to a more structured and reasonable process known as a Reconsideration of Value (ROV).
Under certain circumstances, buyers may now request a Reconsideration of Value through their lender. This process allows additional information, comparable sales, or potential appraisal concerns to be formally reviewed.
There are important guidelines, however.
Lenders must adopt written policies and procedures for handling ROV requests, and not all lenders may offer this option. Requirements and eligibility can vary, so it’s important to speak directly with your Loan Originator to understand how the process works.
I believe this is a positive development for buyers, sellers, and Real Estate Agents alike.
As interest rates improve and market activity increases, we’ll likely continue seeing upward pressure on home prices. Having a fair and structured review process in place may help prevent some transactions from unnecessarily falling apart after so much effort from all parties involved.
The homebuying process can already feel emotional and challenging enough. Any improvement that helps create fairness, transparency, and solutions is a step in the right direction.
And despite the challenges, it’s still a great time to buy.
If you’ve been sitting on the sidelines waiting for rates to improve, now may be the perfect opportunity to reconnect with your favorite Real Estate Agent, explore your options, and get ahead of increased competition as more buyers re-enter the market.
The right strategy and the right team can make all the difference.
Jay Atterstrom
📧 [email protected]
📞 (214) 377-0033