THE IMPACT OF RISING PRICES ON
HOME APPRAISALS
The fact that residential home prices are increasing substantially in most regions of the country is music
to the ears of homeowners. However, if you are in the process of selling your home, make sure you are
aware of the major challenge a hot real estate market creates.
Each house must be sold twice; once to a buyer and a second time to an appraiser who represents the
bank that will grant the purchaser a mortgage to buy the home (unless it is an “all cash” purchase). In a
real estate market with escalating prices, the second sale may be the more difficult one. The Quicken
Loans Home Price Perception Index reveals that the gap between what a homeowner believes is the
value of their home compared to the appraisal has widened.
This could lead to an increase in the percentage of real estate transactions being challenged by a ‘short’
appraisal (where the appraiser value is less than the contracted price of the home).
Bottom Line
If you are planning on selling your home, you must be prepared for this possibility as it may result in a
renegotiation of the price of the home.
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