Homeowners putting their homes on the market are sometimes in for a rude shock when their home appraisal comes back. Their home isn’t worth quite what they thought it was.
Quicken Loans says the valuations determined by professional appraisers were 1.95% lower in April than what homeowners estimated. The company’s Home Price Perception Index measures the gap between what the homeowner expects and what the market will pay.
That said, professional appraisals trended higher in April. Actual home values dipped a slight 0.66% from March, but grew at a measured pace on an annual basis – rising 3.79% according to Quicken Loans’ national Home Value Index (HVI). The HVI is based solely on appraisals, one of the most important data points in the mortgage process.
Becoming more realistic
The monthly survey show homeowners have become more realistic in recent months. Not only have they had more time to adjust to post-bubble market conditions, home values have been rising in the last year. Homeowners in the east are most likely to over-estimate their homes’ value while homeowners in the west most likely to underestimate it.
“The HPPI is in a healthy trend, nationally,” said Quicken Loans Chief Economist Bob Walters. “While everyone wants their appraisals to come back showing more equity than anticipated, like some homeowners in the West, the discrepancy we are seeing now won’t likely derail a mortgage transaction.”
Appraisals are based in large part on what comparable homes in a market are selling for, but there are things a homeowner can do to make sure his or her appraisal comes in at the high end of the range.
Improving curb appear with landscaping and nearly painted trim, along with a neat, decluttered interior, can make a good impression of an appraiser, just as it can on a potential buyer.