When you get your home appraised, you probably cross your fingers, hoping the number comes back as high as possible. But an appraiser’s job isn’t to give you the value you want. They take an objective look at your home’s condition, features, and how it compares to similar homes nearby. That’s why many homeowners end up asking, what can lower appraisals?
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The appraisal looks at both your home and the local market. Appraisers consider things like your home’s size, condition, and features, along with what’s happening with home prices in your area. If your home has a few red flags or the market is cooling off, your appraisal could take a hit. Knowing what affects the final number can help you prepare your home for sale and potentially boost its value.
Let’s break down the most common reasons a home’s appraised value can come in lower than expected and what you can do to help your property look its best.
A quick primer: How appraisers typically value homes
The most common way appraisers figure out what your home is worth is by using the comparable sales method. Appraisers compare your property with similar homes that have recently sold nearby, known as comps, to come up with a fair estimate of your home’s value.
Comps are most reliable when they closely match the age, size (square footage and the number of rooms), and location of your property. Additionally, a good comp will have the same amenities as your home, such as a pool or a two-car garage.
If your agent prepared a comparative market analysis (CMA) for your home prior to pricing and listing it, then the appraiser’s comps selection shouldn’t be a major surprise. You’re likely both working off the same available data and sales history for your area.
Other property valuation approaches: If your property is primarily a rental or Airbnb, your appraiser may instead use the income approach to determine the value of your home. Rather than comparing it to nearby home sales, they’ll look at how much rental income the property could bring in. The stronger its income potential, the more it can support a higher appraised value.
They may also turn to the cost approach to value new construction or if your property is unique enough that there aren’t comps in the market to do it justice. This method looks at what it would cost to build your home again from scratch. It considers the price of the land, the cost to rebuild the home, and how much value the existing structure has lost over time.
In this article, we’ll focus on the comps approach since it’s usually what you’ll see in the average real estate transaction or refinance situation.
Which factors can lower your home’s appraised value?
Your home’s appraised value is based on a mix of different factors, and some can help boost the number while others can pull it down. While you can control some things, like your home’s condition, others, like market shifts and the economy, are simply out of your hands.
Your home doesn’t appear to be in great shape
“If your home is filthy or doesn’t smell good, an appraiser doesn’t want to spend a lot of time in it. They might not even notice big-ticket, value-add items,” says Michelle Minik, a Phoenix-based real estate agent with 26 years of experience. You’ll also raise red flags with the appraiser if your home looks poorly maintained with wall dings and scratches, peeling paint, or beat-up floors.
What can you do about it?
Make it easy for an appraiser to focus on your home’s assets with this checklist:
Clean the home as you would for house showings.
Appraisers technically aren’t trained to dock you for cleanliness, but first impressions matter, and you want to show that you’ve cared for the home properly. Declutter your home: vacuum, dust shelves and cabinets, sweep and mop your floors, and wipe down countertops and surfaces. Pick up your kids’ toys and put away items cluttering up your floors and hallways. Make sure you don’t have any dirty dishes in the sink.
Spruce up your curb appeal.
Mow the lawn, pull up any weeds, edge your flower beds, and clean up the entryway. You can’t necessarily put a price on curb appeal through quantitative appraisal methods, but appraisers do take it into account qualitatively when reconciling that final value.
Address any light repairs and routine maintenance items.
Check that all your home’s outlets work, replace any burned-out light bulbs, and hire a handyman to fix issues like broken door handles, drywall holes, or loose cabinet faces.
Don’t invest in any big remodeling projects.
Preparing your house for the appraisal should never involve last-minute renovations because you’ll rarely get back what you spend dollar for dollar. If you want to improve your home’s value in the long term, you should plan projects well ahead of time. For the appraisal alone, focus on making the house look its best in its existing state, regardless of whether your bathroom or kitchen is outfitted with the latest trends.
Your home has unpermitted improvements
Unpermitted improvements can lower your home’s appraised value because appraisers generally can’t give the same weight to work that hasn’t been approved by the proper authorities. Room additions, finished basements, converted garages, or major renovations without permits may raise questions about whether the work meets local building codes.
In some cases, the appraiser may exclude the extra square footage or features from the valuation altogether. This can make your home appear less valuable compared to similar properties that have properly documented upgrades.
Unpermitted work can also create concerns for buyers and lenders, which may affect how much they’re willing to pay. Even if the improvements look great, missing paperwork can make them harder to count toward your home’s value.
What can you do about it?
If you have unpermitted improvements, start by finding out whether you can get the proper permits after the fact. Your local building department may allow you to have the work inspected and approved, which can help remove some uncertainty for the appraiser and future buyers.
Gather any documentation you have, such as contractor receipts, plans, or proof of materials used. If getting permits isn’t possible before the appraisal, be upfront about the work and explain what was done.
Your real estate agent can also help you understand how similar homes with unpermitted improvements are typically valued in your area.
You’re in a neighborhood with declining conditions
Appraisers consider factors beyond your property, including local market trends, nearby sales, and the overall appeal of the area. High crime rates, declining property conditions, or weaker school districts can make buyers less willing to pay premium prices. If demand for homes in the area has decreased, comparable sales may reflect lower values.
What can you do about it?
You can’t change your neighborhood overnight, but you can highlight the positive features that still make your area appealing.
Work with your agent to identify strong comparable sales and provide information about nearby amenities, recent improvements, or positive market trends. If there are neighborhood factors that may concern buyers, make sure the appraiser has a complete picture rather than just the negatives.
Improving your own home’s curb appeal and maintenance can also help it stand out among nearby properties. Pricing your home realistically based on current market conditions can help avoid a large gap between expectations and the appraisal.
Your home is near places that may turn off buyers
Certain nearby features can affect how buyers perceive your home and, in turn, influence its appraised value. Homes located near busy roads may deal with concerns about traffic noise, privacy, or safety. Being close to certain facilities, like homeless shelters or cemeteries, may also affect buyer demand depending on the market and local perceptions.
Appraisers consider how these location factors compare with similar homes that have recently sold nearby. If buyers are less interested in properties with these characteristics, that reduced demand can show up in comparable sales.
What can you do about it?
While you can’t move your home, you can focus on minimizing the impact of nearby drawbacks. Use landscaping, fencing, and outdoor improvements to create more privacy and reduce the visual impact of surrounding features. Be prepared to highlight nearby positives, such as convenience, walkability, or access to amenities. These strategies can help you sell your home even in an undesirable location.
You have unideal neighbors
While you can keep your own home in great shape, you don’t have much control over what’s happening next door. Things like run-down neighboring homes, loud noise, or ongoing issues with nearby properties can affect how buyers feel about the location. Appraisers may take these surrounding factors into account when comparing your home to similar properties.
If nearby homes look neglected, buyers may question the overall appeal of the area. When fewer buyers are interested, it can affect comparable sales and potentially bring down your appraisal value.
What can you do about it?
If you have less-than-ideal neighbors, focus on making your own property stand out. Keep your home, yard, and exterior well-maintained so the appraiser can see the care you’ve put into it.
If there’s a temporary issue with a nearby property, let your agent know so they can provide context when needed. Your agent can also help find comparable homes that better reflect your property’s condition and value.
Simple upgrades like fresh landscaping, fencing, or privacy features can help create more separation from nearby homes. While you can’t control what your neighbors do, you can control the impression your home makes.
»Learn more: If your home isn’t getting offers or a low appraisal is slowing things down, there may be a few factors working against you. Try our “Why Is My Home Not Selling?” Reason Randomizer to find possible reasons your property isn’t attracting buyers.
You have a unique property
Maybe your home has something most properties in your area don’t, like a spectacular view, a specialty garage, or custom-built features. There could be a concern that the appraiser won’t know how to price these features and could undervalue them, leading to a lower appraised value.
What can you do about it?
First things first, have a sanity check with your agent to confirm the feature is indeed a value-add. “I’ve seen some koi ponds in my experience,” says Minik, “but in reality, they’re not a ton of added value. I don’t necessarily think everybody’s going to see a lot of value in that.”
However, if you’re selling a luxury property with lots of special amenities and you’re worried about whether the home will appraise before closing, Minik recommends that sellers get a pre-listing appraisal. This can help ease your worries about your home’s value and make it less likely that the lender’s appraisal comes in lower than the agreed-upon price.
You have a lot of basement-level square footage
No matter the quality of your finished basement, it’ll never have the same value as above-ground living for an appraiser. “Appraisers will take a baseline of, say, $100 a square foot for the above-grade space. And maybe the below-grade space is 70% or $70,” says Chuck Argianas, a professional appraiser with over 30 years of experience valuing homes.
What can you do about it?
You can’t change the fact that your basement is below grade, but you can get a better idea of how an appraiser may view the space before the appraisal happens. Basements with features like a separate entrance, plenty of natural light, finished rooms, or a walkout design may be more appealing and could be valued higher than a basic unfinished basement.
The farther below grade your basement is, the less likely its square footage will be valued the same way as above-ground living space. It can also help to talk with your real estate agent ahead of time to understand how basements are typically appraised in your area, so you know what to expect when the final number comes in.
Your appraiser included a bad apple in the comps pool
The comps your appraiser uses can play a big role in where your home’s appraised value lands. Since appraisers know what to look for when choosing and reviewing comparable homes, they’ll usually pull sales data that gives a pretty accurate picture of your home’s worth.
However, let’s say that there are two identical homes in the same location, but the appraiser pulled the lower value of the two to appraise your home. It turns out one of them was a divorce sale. The owners were in a rush to sell to move on quickly, so it sold for less. In this case, you might have a case that would prompt an ethical appraiser to own up to the mistake and modify their report.
What can you do about it?
If you and your agent have already created a CMA to help price your home on the market, then you probably have a good idea of the comps in your area and can share what you know with the appraiser. While it’s not recommended for you personally to be on-site during your property’s appraisal, you can ask your agent to be there for assistance.
Naples-area agent John Krol makes it a point to attend his sellers’ appraisals to offer perspective on selected comps. “I just want to help the process any way I can to make sure it goes smoothly, and the comp properties are reflected in the property’s value,” Krol says.
Your local market is shifting faster than expected
Sometimes, the housing market moves faster than the sales data available to appraisers. Ideally, they’ll use homes that sold within the past 90 days, but if there aren’t enough recent sales to work with, they may need to look further back. That’s why it helps to have an appraiser who knows the local area well and understands the neighborhood’s pricing trends.
What can you do about it?
If you believe the appraiser used outdated or less relevant comps, you may be able to request a reconsideration of value and provide updated sales data or other information that may have been overlooked.
Work with your agent to see whether recent market trends support a different valuation and whether the comps used in the appraisal accurately reflect your home’s market. Make sure the comparable properties are as recent as possible and that the appraiser considered their final sale prices, not just their listing prices.
If the lower appraisal is accurate, you may need to adjust your pricing strategy or negotiate with the buyer. While you can’t control the market, staying informed and working with professionals who understand your area can help you make the best next move.
How to challenge a low appraisal
If your home’s appraisal comes in lower than expected, you may have options to dispute it. Here’s how you can push back effectively:
- Request a copy of the appraisal report: Review it carefully for errors in square footage, missing upgrades, or incorrect comps. Even small mistakes can impact the final value. If you find discrepancies, you can present evidence to request a correction.
- Provide better comparable sales: Sometimes, appraisers use outdated or less relevant comps. Research recent sales of similar homes in your area, ideally within the last three months. If you find stronger comps, submit them as part of a reconsideration request.
- Showcase missed home upgrades: If the appraiser didn’t account for certain improvements, provide proof such as receipts, permits, or contractor invoices. Emphasize major updates like a renovated bathroom, new HVAC system, or upgraded flooring. Highlighting these enhancements can help support a higher appraisal value.
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Ready for the appraisal?
The appraisal process can feel a little stressful and confusing, especially since there’s only so much you can control as a homeowner or seller. But taking a few steps to prepare your home before the appraiser arrives can help ease some of that stress and put you in a better position for the highest value possible.
While you can’t control things like market changes, you can focus on the things that are in your hands. Taking care of repairs, making small upgrades, boosting curb appeal, and keeping your home well-maintained can go a long way when the appraiser takes a closer look.
If your appraisal comes in lower than expected, don’t panic. You have many options to challenge it or adjust your pricing strategy. To navigate the selling process with confidence and maximize your home’s value, consider partnering with a proven real estate agent who can provide expert guidance and market insights.
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