Appraisers and homeowners are often not in sync when in comes to actual appraisals and owners’ expectations of residential property values. The homeowner may “expect” his/her home to be valued at x; the appraisal of the home may come in at y. Recently, the gap is widening between the owner’s expectations and the appraisers number in markets across the country.
To shed some light on the disagreement appraisers and homeowners have about appraisals for the purposes of purchase and sales, Quicken Loans just reported its monthly findings on real estate property sales around the country. The report concluded that the discrepancy between owners’ expectations and appraisals of residential properties had widened 0.63% between February and March of 2016. Appraisals were 1.77% lower than owners’ expectations for the fourth consecutive month in a row. For the year from March to March, that discrepancy gap increased to 3.3%.
Bill Banfield, Vice President of Quicken Loans’ Capital Markets division, says that “the national average shows appraisals lower than home owners’ expectations but, some cities are bucking that trend.” Most of the cities bucking this trend are cities in the West that are experiencing hot, bustling housing markets. Remember, real estate markets are local. “This study is one more reminder for consumers to keep an eye on their local market before selling or refinancing their home.” Banfield advised. He concluded by saying that “…the state of (the consumer’s) local market could affect their home’s value on either end of the spectrum.”
So, why are homeowners ahead of appraiser values? Analysts expect that its because sellers know that overall home values across the country are going up. With low inventory across the United States, homes are being snatched up at a furious pace, causing sellers to celebrate with some increasing sale prices.
Its important to remember not to pop the bubbly too quickly though! In markets where home values are not quite as hot, contracts can be stymied with an appraisal that doesn’t come up to the value the buyer and seller negotiated. As this years spring market takes off, data shows that the Northeast region is where you can expect to pay more and where sellers can expect to realize those higher appraised values. In contrast, the West had the smallest monthly increase in prices, so sellers on the left coast should think more conservatively about their homes value.