Accuracy of Home Appraisals
Accuracy of Home Appraisals
An appraisal is performed upon requesting for mortgages or home equity loans. Below is a discussion on the accuracy of home appraisals.
Generally, home appraisals are fairly accurate. For home purchases, they usually stay close to the purchase price. Further, for refinances, they usually come in value. However, one can expect exceptions as two appraisers will most likely arrive at different values.
One of the recent trends in the lending industry is that there are appraisal management companies (AMCs) that are relied upon for appraisals. However, there is a claim that these are not familiar with the neighborhoods where the properties are situated. Sometimes this leads to arguments as the mortgage broker or the real estate agent may oppose the comparison sales (comps) used for appraisal.
Eventually, the final value will depend upon the appraiser’s analysis, which depends on the comparison scales they use. It is rare that two appraisers come up with the same value for a property, but two or more can arrive at something similar in range. Remember that possible inconsistencies may prevent investors from buying the mortgage, pushing the lender or the bank to a loss if there is a decline in the value of the property.
