Appraisals start to match up
Appraisals have long been the bane of home buyer existence. As home prices have climbed, appraisals just haven’t caught up, and the result has been more and more out-of-pocket expenses for today’s buyers, or a lost sale altogether. Fortunately, it looks like those days may be numbered.
Buyers, appraisers finally on the same page
According to the Quicken Loans National House Price Perception Index, actual appraised values and the homeowner’s perceived value of their property are finally falling in line. In fact, the HPPI shows appraised values were actually lower than homeowner estimates by 0.67 percent last month. This is the closest the two figures have come all year and the smallest that gap has been since early 2015.
“Homeowners, on average, have a higher opinion of their home values than appraisers do,” Quicken reported. “However, the gap between the average owners’ estimates and the average appraised values has reached its narrowest margin in 2017.”
According to Bill Banfield, Quicken’s executive vice president of capital markets, this spells good news for buyers.
“It’s encouraging to see opinions from homeowners and appraisers more aligned on a national level,” Banfield said. “Appraisals are one of the most important data points when applying for a mortgage. If an appraisal is lower than expected when refinancing, the homeowner will need to bring more funds to closing, or might even need the mortgage to be restructured. The more homeowners and appraisers agree, the smoother the process is.”
At a city level, Cleveland appraisals came in the furthest under homeowner perception – 2.35 percent lower than expected. Dallas homeowners, on the other hand, aren’t estimating their values high enough. Appraisals in the city are coming in 3.25 percent higher than homeowners think.
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