Appraisals a Big Challenge But Getting Easier
One of the biggest challenges facing builders and people selling their homes in St. Tammany Parish and Southeast Louisiana are the appraisals that are given for the homes for sale and built new homes. Recently, in the last few years, laws were established requiring banks and mortgage companies to choose appraisers from a universal list, giving each appraiser an equal amount of work. However, because appraisers are not required to go through
intensive training and maintain continuing education, some appraisals that were turned in to the banks and mortgage companies fell far below what the perceived value of the house was.
This causes a problem for the closing process in that the loan amount is often more than the house is worth, according the appraiser. The appraisal process for a home for sale or new home for sale in a new neighborhood or in a rural part of St. Tammany Parish, where there aren’t a lot of “comps” (comparisons of homes previously sold in the area) can be a stressful one for a home buyer looking to buy a new home or existing home for sale, unless it is a cash sale. The appraisal dictates to the mortgage company or the bank how much the loan amount can be based upon the value of the house and / or the down payment of the buyer.
“An appraisal can vastly impact the mortgage process. This number alone can impact how much a buyer needs to bring to closing, or the current equity a homeowner has when refinancing,” said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “If homeowners are aware of local home values and how they are changing, it will assist with a smoother mortgage process.”
However, there is good news for the real estate industry, the distance (difference) between the amount of the appraisal and new home and existing home prices has narrowed for 4 months in a row according to the National Quicken Loans home Price Perception Index (HPPI). Appraised values are still falling short of home prices, but the most recently logged margin during the month of September was 1.14%. This is good news for builders looking to sell their homes (and have them appraise) at market value.
