In today’s world, more and more people or find it difficult to refinance their mortgages since banks or other lenders are adding extra circumstances for borrowers to get the eligibility of refinancing. So as a result, the risk of a low house appraisal has been increased in the recent years. Of course in order for us to be able to get a new loan or refinance our current one, we need to get a house appraisal, but unfortunately houses are getting lower appraisals everyday and as a result, less number of lenders are willing to offer a great deal.
If you are looking for a good source to understand how an appraiser actually determines an appraisal for your house, look no further since in this article I’m going to explain that to you. Also you are going to learn why appraisals are much lower compared to several years ago and what reasons have caused this to happen.
The main factor affecting your house appraisal by the appraiser is the real estate market in your neighborhood. This means if the appraiser investigates your neighborhood and sees there are many houses up for sale at the moment, it can lower your house appraisal because it is obvious that your house will have a hard time being sold. A house appraisal is basically the price of the house if you want to sell it right now.
The low house appraisal for your house is basically because of the competition. Just like anything else, when something wants to be sold and there are lots of competition for it, the price will decrease. So if your house is only one of many houses in the neighborhood which is up for sale, it is obvious that if it offers the same space and quality as many other houses in the neighborhood, the buyer is going to purchase it only if it is cheaper than other houses. So that is why the appraiser needs to lower the value of your house for it to be able to compete with other similar houses.
One main reason behind a lot of competition existing in every neighborhood is a lot of homes being repossessed by banks or other lenders and being set up for sale at an affordable price. When a borrower is not able to pay their payments on time, the property will be repossessed by the lender, so the lender wants to turn this repossessed property into money as soon as possible so they can get their money back and offer better loans to borrowers, so if your neighborhood has lots of repossessed houses, most of them probably have an affordable price, so in order for your house to be able to compete with them, the appraiser needs to lower the value of your house as well. As the economy gets worse every day, the number of repossessed houses by banks become more and as a result, it gets harder and harder for people to get a worthy appraisal for their houses.
You may like it if you can sell your house right now at a similar or higher price than the purchasing price, but it is not it is not going to work like that. The appraisal will check out the selling price of the houses in your neighborhood in the last 3 or 6 months and they will decide your house appraisal based on that. Of course it won’t hurt if you try to explain to the appraiser why your house has a certain value for sale, but you cannot expect that they necessarily agree with you. The only thing that is important for the appraiser is how much of a price your house should have in order for it to be able to be sold in a reasonable time.