How Appraisals Impact Home Sales
It’s well known that lenders are putting new demands on home appraisals so they’re protected from lending more money for a home purchase than what the home is worth. One of the unexpected effects of these new demands is that home sales are falling through because of the appraisal. Before the economic crisis in 2009, fewer than 10% of home sales fell through because of an appraisal. This year, realtors say that the rate is triple that.
One of the major factors that appraisers take into consideration when determining the value of a home is the value of comparable properties in the area. In the past, appraisers could use three comparable properties, but they’re now required to use six or nine. It isn’t always easy to find comparable properties, and appraisers are sometimes forced to use short sell properties or foreclosures. It’s important that you work with an appraiser who knows to take into account what the value of those properties would have been if they were not a distress sale.
Although many more home sales are falling through because of these tougher requirements, there are benefits as well. Tougher standards protect a buyer from paying too much for a property. To make sure there are no unwelcome surprises, sellers should consider getting their own appraisal done before putting their home on the market to make sure that their asking price is appropriate.
Because of these strict regulations that make the appraisal process more complex than it was a few years ago, it’s always a good idea to make sure you’re working with an experienced appraiser who is familiar with your area.
Present Value LLC is a worldwide international appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!
By: Present Value