Homeowners vs. Appraisers (Again)

March 15, 2016 by Jeff Lowen

In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. One major challenge in such a market is the bank appraisal.


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

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). Here is a chart showing that difference for each of the last 12 months.


The gap between the homeowner vs. appraiser’s opinion had been heading in the right direction (closer to even), until this past month, when the gap widened again to -1.99%. Your real estate agent MUST know this to help a buyer or seller properly list a home or present an offer. In most areas less than 5% of all home sales are done without an appraisal. I think it’s much less that that, too!

If you put your home on the market at an inflated price thinking this will give you room for negotiation, then two things happen. #1 You know little about negotiation, and #2 Your inflated price will help sell the other homes that are your competition. Even if everyone agrees on the inflated price, when the appraiser comes, everyone will be in for a surprise! The bank/Lender won’t loan more than the appraised value.

As a buyer, why would you waste your time with an inflexible seller, only to find out that the appraisal stands a chance at killing the deal and all those great homes that have come and gone while you’ve been in the middle of this one, have passed you by. Ouch!

The moral of the story…

Every house on the market has to 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, let’s meet up so I can guide you through this, and any other, obstacle that may arise.

For more information on the value of your home or help crafting an offer that is sure to put you in the driver’s seat; GO HERE!


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