Home Selling FAQs: What Factors Affect Appraisal Values?
When buying a home, one of the final steps before closing will be the home appraisal. The home buyer’s lender will want to be sure that their investment is secure, and they will hire an independent appraiser to evaluate the property.
The appraiser will thoroughly research the area surrounding the subject property, and will be taking into account the recent sold properties. This is fairly obvious.
A good appraiser will also examine what is happening in the current market. Over time, a trend begins to form. Over several months’ time, it becomes clear whether a market is increasing or decreasing, and whether there are distressed properties (short sales or foreclosures) affecting the values.
If the homes that are under contract have going under contract very quickly – say, under 7 days – the market is probably increasing. Especially if there are few or no actively listed homes. This data might help support a price that may be higher than recent sold prices in the area.
On the other hand, if the actively listed homes have been on the market for an unusually long time, those will be a barometer of the market as well. If houses in the area go under contract after an average of 30 days, and there are actively listed homes that have been on the market for 45 days or more, those may be priced a bit high for the current market.
A good listing agent will have already taken these factors into account when helping a home seller price their home for sale. And a good buyer’s agent will do this research before making an offer on a home as well. Most importantly, a strong buyer will be in a good cash position in the event that the appraisal doesn’t meet the offer price.
Keep in mind that appraisal values are reviewed by several parties. Lenders are extremely cautious about mortgage money in the aftermath of the housing crash, so there will be several sets of eyes on the appraisal before it is finalized.