How to request a Reconsideration of Value (ROV)
Quick insights
- A home appraisal is required for most mortgage transactions secured by real estate.
- Home appraisals are ordered by the customer’s mortgage lender to estimate a home’s market value in a real estate transaction, such as a purchase or refinance.
- If the customer has identified errors on the appraisal report or has concerns about its credibility, then the customer has the option to request a ROV.
In this article, we’ll describe the circumstances that can cause the value on an appraisal to be different than the purchase price and the steps a customer can take to request a ROV.
Reasons a home appraisal might be different than expected
An appraisal that comes in with a value different than the purchase price can be concerning, especially when it comes at a later stage in a real estate transaction. Reasons this could happen include:
- Initial over/under estimations: A seller and/or their agent may have over/underestimated the home’s value. This could be for any number of reasons, including conscious or unconscious factors, such as ambitious or emotional pricing.
- Market conditions: A saturated housing market or broader economic downturn can affect demand for homes. This might impact the way property is valued at a given moment.
- Comparable sales (“comps”): If similar homes in the area have been selling at lower prices, it’s less likely that an appraiser will estimate the value of the home much higher without substantial improvements.
- Improvements/upgrades: A property’s appraised value, also known as market value, is based on what a willing buyer would pay in an open and competitive market, considering the buyers’ perceptions and reactions to the improvements/upgrades, not solely the cost of those improvements/upgrades.
What happens if the appraisal is lower than the purchase price?
As a buyer, you may have several options when the appraised value is lower than the purchase price:
- Renegotiating the sale price: A motivated seller might consider lowering purchase price to match the appraised value.
- Increase the down payment: If it’s financially possible, buyers may want to cover the difference between the appraised value and the purchase price.
- Consider alternative properties: Depending on the market and your homebuying goals, you may not want to continue with this property purchase after reviewing the valuation report.
- Request an ROV: An ROV request is allowed by most lenders after the original valuation is provided. The customer should prepare to have documentation supporting potential inaccuracies or missing information.
Step 1: Review the appraisal report
The first thing to do after an appraisal has been provided is to review the complete report for impactful errors and areas of interest. You may want to do this with the assistance of a professional real estate agent who can help you identify potential errors that may impact the final market value.
Step 2: Gather supporting documentation
If you believe you have identified an impactful error in the appraisal report, you will need to collect relevant documentation to support your claim. This could include corrections relating to the home’s square footage, number of rooms or recent upgrades to major components such as the roof, plumbing, electrical, etc. You may also want to provide sales (not already included in the appraisal) from the area, which have sold recently and may appear more similar to the subject property.
Step 3: Contact your Home Lending Advisor (HLA) or Client Care Specialist (CCS) and complete the ROV Request Form
Prepared with supporting documentation to back up your claims, work directly with your Chase HLA or CCS* to complete the Chase ROV Request Form. You can discuss the documentation you’ve provided and whether additional information is needed. For example, if the ROV request is about inaccurate property characteristics, you may need to provide property assessment data, plans/specifications, or other valuation reports on the property.
*Note that there are legal and regulatory requirements that protect the independence of the appraiser; therefore, the customer, or their agents, should not contact the appraiser to discuss the contents, analysis, or results of the appraisal.
Step 4: Processing an ROV
After you have worked with your HLA or CCS to submit the ROV Request Form, Chase will review your request. In addition to what you provide, Chase will also check other relevant market information. The result of the ROV review could result in one of the following:
- The review could confirm that the original appraisal is credible and no changes are warranted.
- The new information provided may result in a revised appraisal, which may or may not result in a change to the appraised value.
- In some instances, a new appraisal may be ordered; in this scenario, you will not be charged for the second appraisal. Please note that obtaining a new appraisal can take several days and doesn’t guarantee a change in the appraised value, which could be higher or lower.
- Chase will send you a copy of the appraisal used in the decisioning of the loan application.
In conclusion
If you believe you have found an error in a home appraisal report, there are steps you can take. Consider documenting your support and submitting an ROV request to the lender. And if your plans include getting a new mortgage, consider reaching out to a Chase Home Lending Advisor to discuss your options.
