Appraisal Adjustment Errors Homeowners Should Know About

My client sent me a frantic text last spring. Her appraisal came in $28,000 low and she could not figure out why. Her house had a new kitchen, a finished garage, and a larger lot than any of the comps. On paper, her home should have come in higher. When I looked at the report with her, the problem was not the comps. It was the adjustments.

Adjustments are the dollar values the appraiser adds or subtracts from each comparable sale to account for differences between that property and the one being appraised. They are where a lot of appraisal errors hide.

What Adjustments Are Supposed to Do

If your home has three bathrooms and a comp has two, the appraiser adds a dollar amount to the comp to reflect what that extra bathroom is worth. If your home has a two-car garage and the comp has a one-car garage, there is an adjustment for that too. Fannie Mae requires that adjustments reflect market behavior, meaning they should be based on actual buyer behavior in your area, not guesswork.

The Most Common Adjustment Errors

The first error is no adjustment when there should be one. If your home has a remodeled kitchen and the comp has an original 1990s kitchen, the appraiser should make an adjustment. If they do not, you are giving up value you earned.

The second error is an adjustment that is too small. Market data in many areas shows that a fully renovated kitchen adds $15,000 to $30,000 in value. If the appraiser made a $5,000 adjustment, that does not reflect buyer behavior and it is worth challenging.

The third error is an inconsistent adjustment. If the appraiser adjusts one comp upward by $10,000 for a garage but adjusts another comp for the same feature by only $3,000, that inconsistency is a problem under USPAP standards.

How to Find Adjustment Errors in Your Report

Look at the adjustment grid in your appraisal. For each comp, the appraiser lists the features that differ from your home and the dollar amount they assigned. Go through those line by line. Ask yourself: does this amount make sense based on what you know about your market?

You can also look at recent sales where the difference in price between two similar homes is mostly explained by one feature, like a finished basement or a pool. That gives you real market evidence for what adjustments should look like.

How to Challenge an Adjustment Error

In your reconsideration of value letter, point to the specific line in the adjustment grid that you believe is wrong. Provide market evidence showing what buyers actually pay for that feature. Keep your argument to the facts. The appraiser must respond to each specific point you raise.

If navigating the adjustment grid sounds overwhelming, worthmore.ai reads the report for you and identifies where adjustments appear to be missing or too low. That is a good place to start.