The Problem with Appraisals
Home Prices Are Up…but there is a Challenge
Home values continue to climb and are projected to increase by about 5% over the next twelve months. That is great news for anyone who owns a home. However, it could present a challenge for a family trying to sell their house.
With prices surging, it is difficult for appraisers to find comparable sales (similar houses in the neighborhood that closed recently) to support the sales price when performing an appraisal for the lender.
The National Association of Realtors (NAR) recently released information revealing just how big this challenge is in today’s market.
And the challenge is worsening…
Every month, Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation in their Home Price Perception Index (HPPI). As you can see, the difference has increased each of the last two months. Take a look:
Real Estate Bottom Line
Every house on the market has to be sold twice; once to a prospective buyer and again to the lender (through the lender’s appraisal). With rising purchase prices, the second sale might be even more difficult than the first. If you are thinking of buying a home this year, let’s talk so I can explain the appraisal challenge, and other obstacles that may arise.