Top 4 Reasons Why Home Appraisals Come in Low

After the buyers decide to purchase a new home, a lot of questions keep them up in the night. The main concern for the buyers is regarding the appraisal coming low. If the buyers are financing the purchase of the home, low appraisals can become the reason for their stress. If the buyers use the mortgage loan to purchase the property, the home appraisal is carried out by the qualified appraisers like Naftali Horowitz to ascertain the actual price of the property. And, if the home appraisal comes less than the purchase price, it will affect the mortgage and the contract as well. The lenders make use of the value determined by the appraiser to input the value for the loan to value calculation. If the appraisal comes lower, the buyers will have to increase down payment to get the mortgage loan. To safeguard their interests, it’s essential for the buyers to know the reasons why appraisals come low.

1. Hot Market conditions: Sometimes, the market trends change at a fast rate as a result of which the appraisal values lag. In the appraisal process, the market trends, comparable sales play an essential role in arriving at the fair market price.  Under such situations, past data will not be able to stay in line with the present market prices. There are certain signs of high-velocity markets like:

a. Bidding and the home visit takes place on the same day.

b. Multiple bids on the same property.

c. People regularly talk about real estate.

2. Sluggish Market Trends: The signs of the sluggish market are, fewer buyers, an increase in the inventory, and slow turnover. Like the hot market, cold markets also make it difficult to get the value of the property right.

3. Appraisers lack knowledge: One of the reasons for the appraisal coming low is due to the incapability on the part of the appraiser. There are certain situations where the appraisers are not aware of the neighboring market conditions resulting in the low appraisals. Also, the lack of experience of the appraisers can be the cause of low appraisal.  So to protect your interests, it's essential to choose the appraiser with years of experience and qualification to carry out the fair appraisal process.

4. Lack of comparables: There are certain situations where in the subject property is unique, and there are not many comparable homes to justify the pricing. If the appraiser has limited information about the property history, it will affect the appraisal process.

Next time you go for the purchase of the property take these things into account. Naftali Horowitz is the appraiser who can come to your assistance to ensure that the appraised value matches the purchased price if the market conditions and other factors are favorable.