Homeowners and appraisers rarely agree on a property’s value, and for the vast majority of the past decade, homeowners have been overvaluing their homes. This year there has been a steadily increasing gap between what consumers thought their houses were worth and the worth determined by appraisers—it’s the first time in 24 months that homeowners overvalued their properties by greater than 9%. Home values are going up, just not as much as homeowners may have believed, perhaps.
Looking at housing market from a national perspective is a very rough look at market performance, because things vary so widely by location.
Every city, and every neighborhood, moves in different directions based on local factors. Consumers need to remember to watch their local area closely to understand the direction their market is heading.
Banks use appraisals to determine whether to back your home loan, whether it’s a purchase mortgage or you’re refinancing, which is why it plays such an important role in the mortgage process. Additionally, appraisals factor in the current local market climate for your location, another major circumstance that you should anticipate changing from time to time.
It’s crucial you can afford your housing expenses, to avoid serious credit and legal issues. When having your home appraised, there are some simple things you can do to make it go smoothly, like tidying up before the appraiser arrives, inside and out, in addition to having an accurate list of improvements you’ve made to the home or any features you want to make sure the appraiser is aware of.