Owners, Appraisers Getting on the Same Page
The discrepancy between appraisers' and home owners' opinions of home values is narrowing. In November, appraisers valued homes 1.56 percent higher than home owners, according to Quicken Loans' Home Price Perception Index.
Dealing With Appraisals
"Mortgage financing often hinges on whether the appraised value coincides with the home values agreed upon by the home buyer and seller in the case of a home purchase, and the home owner's estimated value in the case of a refinance," says Quicken Loans Chief Economist Bob Walters. "It is reassuring to see the gap between appraiser opinions and home owner opinions narrow, and if we had to choose a side of the fence, it makes for a much smoother mortgage process if appraisers are valuing homes above home owners' estimates like we're seeing, as compared to the opposite."
Still, in three-quarters of the metro areas Quicken Loans analyzed, appraiser opinions were higher than home-owner estimates. The difference varies widely among those metro areas, too. For example, in San Jose, Calif., appraisers valued homes 6 percent higher than home owners on average, while in San Francisco, appraisers valued homes 4.35 percent higher. In Dallas, it was 4.22 percent.
On the other end of the spectrum, in Kansas City, Mo., appraisers' opinions were found to be 2.53 percent lower than home owners'.
On a national scale, real estate professionals are reporting fewer appraisal issues as the cause of derailing deals. Appraisals were blamed for only 2 percent of failures to close a sale, according to the November REALTORS® Confidence Index survey of more than 3,700 REALTORS®. Instead, the top closing challenges cited by REALTORS® were difficulty obtaining credit and a lack of affordable homes. About 15 percent of REALTORS® report having clients who could not obtain financing, while about 13 percent say the buyer and seller couldn't agree on the price. Eight percent report that the buyer lost out in a multiple-offer situation.