Appraisal Gap Narrows

Dated: 01/24/2018

Views: 87

Gap Between Homeowners & Appraisers Narrows To Lowest Mark In 2 Years

Gap Between Homeowners & Appraisers Narrows to Lowest Mark in 2 Years

In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 4% or more over the next twelve months. One major challenge in such a market is the bank appraisal.

When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.

Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is.

In the latest release, the disparity was the narrowest it has been in over two years, as the gap between appraisers and homeowners was only -0.5%. This is important for homeowners to note as even a .5% difference in appraisal can mean thousands of dollars that a buyer or seller would have to come up with at closing (depending on the price of the home)

The chart below illustrates the changes in home price estimates over the last two years.

Gap Between Homeowners & Appraisers Narrows to Lowest Mark in 2 Years | Keeping Current Matters

Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges homeowners to find out how their local markets have been impacted by supply and demand:

“Appraisers and real estate professionals evaluate their local housing markets daily. Homeowners, on the other hand, may only think about their housing market when they see ‘for sale’ signs hit front yards in the spring or when they think about accessing their equity.”

“With several years of growth, owners may have more equity than they realize. Many consumers use the tax season at the beginning of the year to reevaluate their entire financial life. It also provides a good opportunity for them to consider how best to take advantage of their equity while mortgage interest rates and borrowing costs are still near record lows.”

Bottom Line 

Every house on the market must be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, meet with an experienced professional who can guide you through this and any other obstacles that may arise.

Blog author image

Michael Le

Michael has been a Real Estate Broker in the Denver area for 17 years. With over hundreds of closed transactions under his belt he is a wealth of knowledge. Michael is skilled at contract negotiatio....

Latest Blog Posts

Bankruptcy Blues Not True

Boomerang Buyers: Most Qualify for Financing in 2-3 YearsAccording to a new study from Lending Tree, Americans who have filed for bankruptcy may be able to rebuild enough credit to

Read More

What Do You Need To Do To Get Your Home Ready

20 Tips for Preparing Your House for Sale This Spring [INFOGRAPHIC]Highlights: When listing your house for sale your top goal will be to get the home sold for the best price possible! There

Read More

Not Your Mama Or Papas Interest Rates

Be Thankful You Don’t Have to Pay Your Parents’ Interest Rate! Interest rates hovered around 4% for the majority of 2017, which gave many buyers relief from rising home prices and helped

Read More

Choosing The Right Home

7 Factors to Consider When Choosing A Home to Retire InAs more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In

Read More