Clearing a Low Appraisal in Underwriting
When an appraisal comes in below the purchase price or refinance value, the transaction must be restructured. Options include price renegotiation, Reconsid
What Is This Condition?
- A low appraisal means the appraised value is less than the purchase price. The loan amount cannot exceed the appraised value.
A low appraisal means the appraised value is less than the purchase price. The loan amount cannot exceed the appraised value.
How to Clear This Condition
- 01Calculate value shortfall
- 02Present options: ROV, price renegotiation, cash difference
- 03If ROV: gather comps
- 04Submit ROV request to AMC
- 05Restructure loan if needed
Documents Required to Clear This Condition
- ROV request with supporting comparables (must be at least as comparable as those used)
- Seller agreement to reduce price
- Buyer cash-to-close increase to cover shortfall
- Evidence appraiser missed relevant comps
How CTC Handles This Condition
CTC orders appraisals immediately on intake to give maximum time to resolve low appraisal issues. When an appraisal comes in low, CTC identifies the comps used and researches whether better comps support an ROV.
Frequently Asked Questions
What is a Reconsideration of Value (ROV)?
An ROV is a formal request to the appraiser to reconsider their value given additional comparables or market evidence. CTC prepares ROV packages with supporting comps and submits through the AMC.
How successful are ROVs?
Appraisers have professional discretion and most won't change their value without clear evidence of a missed or misinterpreted comparable. CTC is selective — we only request ROVs when there's real supporting evidence.
What if the ROV is denied?
Options: buyer pays the difference, seller reduces price, or the transaction is canceled. On refinances, the loan amount must be reduced to match the appraised value.