So, your buyer got your home appraised and WHAM, it seems to have come in “way under value”. Maybe it didn’t.
With the hot market we’ve been in for the last couple of years, it’s understandable that you would expect your home value to be considerably higher than it was in the past. The truth is that our market is moderating or cooling and, while prices are still going up, they’re going up at more “normal” rates.
Each month, Quicken Loans releases their national Home Price Perception Index (HPPI). This month’s report revealed that the difference in appraiser home value opinions as compared to homeowner estimates is continuing to increase. Chief Economist Bob Walters explains:
“Many homeowners around the country are seeing the national headlines about home value increases and they are optimistic about their equity increasing. While some areas are seeing the same level of home appreciation, or even more, there are also some areas that have slower home value increases. This can lead to homeowners and appraisers not quite seeing eye-to-eye.”
Here is a chart showing the increasing difference in opinions:
Though reports of home price increases have garnered many headlines over the last six months, most experts expect residential real estate values to start showing more historic levels of appreciation over the next five years. Walters addressed this issue:
“A slowing of home value increases adds to the misunderstanding of local home values. Appraisers are viewing the housing industry every day; they know when home values growth may be slowing. Homeowners may think values are still skyrocketing, when they have instead returned to more healthy appreciation in their area.”
When listing and pricing your home, remember that appraisers are comparing your home’s value to other homes that have sold in the past. In addition, bear in mind that the market is moderating into a more normal appreciation rate.