In today’s post-pandemic housing market, some real estate agents in Spokane say that residential appraisals are coming in lower than expected, leading to agreed-upon deals being upended and frustrating sellers and buyers. 

Jordan Tampien, co-founder of Spokane-based 4 Degrees Real Estate, says his office has been tracking a trend in low appraisals. Although he can't say for certain how many appraisals have come in below what the buyer and seller had agreed upon, it's a definite change from the way homes were selling last year, he says.

"Typically, you see low appraisals coming in during a hot market," Tampien says. "But right now, it's not cold but more of a warm market." 

When an appraisal is required by a mortgage lender for a home purchase and that appraisal comes in lower than the agreed-upon sales price, the buyer and seller have a few options. The buyer can come up with extra money. The seller can lower the price to meet the appraised amount. Or both parties can walk away from the deal. 

Appraisers say that what may feel like a pattern to agents or sellers is more often a reaction to isolated, but impactful, events that are further complicated by shifting market expectations.  

Keith Connolly, owner of Berg Appraisal Services PC, says less than 0.5% of his firm’s appraisals have come in below contract price from 2024 to spring 2025. Berg Appraisal Services completed over 2,400 residential appraisals from January 2024 to April 2025, Connolly says. 

“We saw more (appraisals) during COVID coming in low because people were making multiple offers … and the market just couldn’t keep up," Connolly says. "But right now, because the market has been so stable, it just hasn’t happened.”

Connolly believes the low-appraisal perception persists partly because of the emotional impact that an event like that can have on the multiple people involved, but also because of a confusion between appraisals coming in below the asking price versus below the agreed-upon contract price. He estimates that over 70% of homes are currently listed too high and require price reductions before they can sell. 

“List price is very different from sales price,” Connolly says. “So we may come in under the original list price because that is what it was listed for, not what it was sold for, but I think coming in at sales price is probably statistically different.” 

When an appraisal does come in under the agreed-upon sales price, it typically involves homes that have features that don't align with a traditional single-family home. Such features can include a large shop or a large accessory dwelling unit.

“It’s just so unique,” he says. “Those are properties that will frequently, and I will use that word this time, will frequently come in low just because there’s not enough market participants out there willing to pay up for it.” 

Bruce Jolicoeur, senior managing director of Valbridge Property Advisors Inc., a commercial property valuation and advisory services firm, notes that commercial real estate appraisals follow many of the same guidelines as residential real estate, such as reviewing market conditions, location, and property amenities. Commercial properties also employ an income capitalization approach, which determines factors such as the market rent on multifamily properties. This approach subtracts vacancies and expenses to calculate the net operating income. 

He notes that the market is also experiencing a shift due to rising interest rates that have reduced buyer purchasing power and cooled the seller-dominated conditions of recent years. Appraisers, he says, are hired to appraise the market value of a property, and not to prove the agreement price or listing price. While a sales agreement on a property is a strong indicator of its value, it is overridden if comparable market data doesn’t support it, he says. 

Additionally, Jolicoeur contends that the expectations of people selling a property are often rooted in memories from when properties were at a peak value, which clashes with today’s market landscape. 

“We’re at a kind of inflection point in the market,” Jolicoeur says. “We’ve had years of exceptional growth, exceptionally rapid increasing prices in residential real estate and commercial real estate industrial properties. We also had artificially low interest rates, which allowed people to buy up or pay a bit more than they ordinarily would be able to do.” 

Today’s market realities include interest rates double what they were in early 2022, and a shift away from a seller’s market to more of a buyer’s market, he says. In the past two years, Valbridge Property Advisors completed about 650 appraisals per year, down from nearly 800 during peak years, he says. The slower sales pace began around spring and summer of 2022, aligning with the Federal Reserve’s interest rate hikes, he points out. 

“The amount of appraisals we did for financing transactions fell off significantly in 2024 and 2023 because there were just very few people borrowing money,” Jolicoeur says. “Today, the business is coming back a little bit. We’re a little bit more active in that particular arena.” 

Richard Hagar, a residential appraiser and real estate compliance and regulation expert, says real estate agents and appraisers have two differing views of market value. Agents view market value as what a buyer is willing to pay, while appraisers are governed by federal law to determine what the majority of buyers would pay under typical conditions. 

“That in itself creates a gap,” he says. 

Lately, Hagar says he has noticed how builders and sellers are offering concessions in order to sell a home. While they are allowed to do that, appraisers are legally bound to subtract such concessions from the value of a property, he says. 

For example, a seller with a $500,000 property might offer to pay $10,000 of a buyer’s closing costs or buy down the interest rate to incentivize a sale. An appraiser is required to subtract the concession from the total, he says. Appraisers can be fined and have their license revoked if they don’t follow the law or are charged with fraud, he adds. 

“Unfortunately, that’s when we usually get the phone calls and people screaming at us,” Hagar says. 

According to the Spokane Realtors' Association, the total number of single-family homes sold in the Spokane area in 2024 totaled 5,650. 

However, total homes sold in a year does not translate to a total number of appraisals completed. In Spokane County, typically 15% of transactions have an appraisal waived due to the buyer having good credit or being able to hand over a large down payment, Connolly says. Last year, 17% of homes sold were paid in cash.