Arizona Homes for Sale – Appraisals
In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. In fact, a recent article by Keeping Current Matters shows that the prices for Arizona homes for sale have risen an average of 5.8% year over year last year.
Arizona Homes for Sale – Appraisal Disparity
Many experts are projecting that home values could appreciate by another 4% or more over the next twelve months. One major challenge in such a market is the bank appraisal.
When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank. Usually homeowners think their home is worth more than the banks appraiser – this is referred to as a ‘disparity.’
Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is. In the latest release, the disparity was the narrowest it has been in over two years, as the gap between appraisers and homeowners was only -0.5%. This is important for homeowners to note as even a .5% difference in appraisal can mean thousands of dollars that a buyer or seller would have to come up with at closing (depending on the price of the home)
How to Prepare Your Arizona Home for Sale for an Appraisal
After taking many appraisal classes I can share with you a few things you can do to help your REALTOR® (that would be me) help the appraiser understand all f the things that have been done to your home over the last ten years and put a cost factor to each thing. Mind you, I did not say what you have done to the home over the last ten years, but what has been done (by anyone) over the last ten years.
Take for example that you have owned your home for only the last four years. However, the previous owners had installed a new kitchen and had renovated the bathrooms. You remember that they told you when you bought the house that they (the previous owners) spent $40,000 on the new renovations.
Since you have owned the home you have replaced the roof at a cost of $10,000 and updated the flooring at a cost of $8500, You had the house painted inside and out at a cost of $4500. These are all things that an appraiser needs to know!
Help Me Help You With Your Arizona Home
Some real estate agents let the appraiser come over when they want and do not take the time to talk with the appraiser and show them comparable homes in the area, nor the list of upgrades – this, in my opinion, is doing a disservice to their client, the home seller.
I advise all of my real estate clients who I am selling their home that they need to prepare a simple list of what has been done over the last ten years to the home (whether they did the upgrades or the previous owner) and put a cost to that repair or upgrade. In most occasions, the list becomes pretty long and the price of the appraisal goes up because we have helped the appraiser know all of the things that have been upgraded on the house in comparison to other homes in the area.
Here’s the Bottom Line When You want to Sell Your Arizona Home
Every house on the market must be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, talk with me so I can guide you through this and any other obstacles that may arise.