By Brandon Konieczny, Princeton Mortgage Wholesale
As we have progressed in the New Year, which it is hard to believe we are almost half way through January, but we are seeing a lot of interesting shifts in the market from rising interest rates to an increase in loan applications submitted in comparison to December. But with these very typical market trends, one area of the entire loan process that often is so mundane and too calculated is the appraisal.
Have you ever taken a loan application or tried to assess the value of a home and come up significantly OVER what the actual appraisal reflected? I think its human nature to over evaluate aspects, such as a home value, as often times the evaluation considers the emotional and physical attachment to that object… but in reality those aspects, although nice, do not factor into the actual value.
What is your home worth? What are homes in your area selling for? When was the last renovation completed? These are factors that homeowners and appraisers alike consider in assessing the value of a home. However, in a recent release from Quicken Loans Home Price Perception Index, homeowners and appraisers are agreeing on home values for the first time since March of 2015. With a 0.5% lower evaluation estimate, appraisers are assessing home values comparable to the homeowner’s assessment while overall, appraised values have increased 6.17% from the year prior. Which leads me to think… are appraisers giving values to homes (leading to an equity bubble) or do homeowners have more access to resources to evaluate an educated assumption of what their home is worth?
Why does this even matter? With resources such as Zillow, Trulia, Redfin or any other free service that evaluates property values… what does the future hold for appraisers? With 1) Freddie (ACE) and Fannie (PIW) both having valuation calculators that will let the lender know if an appraisal is needed, and 2) homeowners access to these resources, will the agencies see a physical appraisal in the future as a requirement to obtain a mortgage? But until that day comes, it is refreshing to see that appraisers and homeowners are in agreeance… for now!
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.