Your home in the housing market should be sold twice. The first one is to a prospective buyer and the other one is to the bank, through a bank appraisal.
The housing market experiences major challenges especially when it comes to bank appraisals. That is because home values are drastically changing due to changes in supply and demand. Experts say that this phenomenon will continue by more than 5% for the next twelve months.
Due to the rapid changing of prices in the housing market, appraisers are having difficulties in finding sufficient comparable sales or most popular called “comps”. These sales are referring to comparable houses located in the same area that was closed just recently. It is needed for appraisers to properly determine and defend the house value when performing the appraisal.
Reminders for Home Sellers
For a home seller or buyer, it is better to remember the impact of this challenge in today’s housing market. Don’t forget that in the mortgage process, one of the most important data is the appraisal. Homeowners will most likely bring additional cash to close the deal if the appraisal is low. Or, the loan might need to be reworked. If the appraiser’s opinion and the homeowner’s estimate are close enough, the deal will most probably succeed.
Most of the time, the home owner’s estimate for his/her house value, is different from the market value of his property. When this happens, you’ll need to provide extra cash to cover the shortfall.
In order to protect yourself from low appraisals, get an appraisal before you plan to list your home. Make sure to consult only a qualified appraiser or real estate agent. You can now form an estimated price for your home from the appraisal. You can question a low appraisal because sometimes, appraisers overlooked some information that can still be taken into account.
Every home in the housing market should be sold twice, and most of the times, the second sale (to the bank through bank appraisal) is more difficult than the first one (prospective buyer).