Closing Complex Loans Faster With a Digitized Client Workflow

Join us for a discussion on changes in market demographics, suppliers and how focusing on customer experience and a few simple steps during the mortgage loan process can close deals 3x faster. event: All eyes on purchase

To help power your business forward, we’re bringing together the smartest minds in purchase mortgage marketing to share the insights, tactics and strategies that set leaders apart.

Home appraisal’s ugly history and uncertain future

This is Part I of a deep dive into the home appraisal industry. Today we explore the origins of the appraisal industry and its current lack of diversity.

The digital journey starts at acquisition

Download this white paper to learn how to build a tech-enabled acquisition strategy that will directly contribute to a lender’s ability to maximize profitability and remain competitive.

Appraisals & ValuationsReal Estate

How appraisers value homes in a hot housing market

HW+ appraiser calculator

Robin Sheridan, a real-estate broker with Compass Washington, recently listed a three-bedroom home in Seattle for $795,000. The 76-year-old brick home had what Sheridan considered a “funky layout,” with two rooms added to the back that didn’t quite integrate into the flow of the home. Still, they functioned well as office spaces.

Sheridan received 29 offers on the property, which went pending within five days – and sold for $1.013 million, or 27.4% over the list price.

As anyone involved in the residential real-estate market knows, bidding wars – and contract prices exceeding the list price – are the norm today in many markets around the nation.

Sheridan’s listing appraised at the contract price, and the deal went through without a hitch. But how do appraisers value a home in a market where prices are escalating rapidly – and where nearly two-thirds (64%) of listed homes faced bidding wars in March, according to Redfin, due to low mortgage rates and a severe shortage of homes for sale?

“The challenge is that the sales data you’re looking at is dated,” said Shawn Telford, chief appraiser at CoreLogic. “While the comparable sale might have closed three months prior to the appraisal, it went under contract before that, and market conditions five months ago were different than they are today. That’s where appraisers put on their thinking caps and dig in and do their research on how they might adjust the comparable sale they’ve selected to account for current market conditions.”

Indeed, time adjustments are a valuable tool that appraisers use to reflect changing prices in the local housing market. “They might look at the last three to six months of sales activity – or longer – in a defined market and try to extrapolate what the trend is,” Telford said. “If home prices increased month over month by 1%, they can use that pattern to support an upward adjustment to the comparable to accurately reflect what the subject property might be doing.”

This content is exclusively for HW+ members.

Start an HW+ Membership now for less than $1 a day.

Your HW+ Membership includes:

  • Unlimited access to HW+ articles and analysis
  • Exclusive access to the HW+ Slack community and virtual events
  • HousingWire Magazine delivered to your home or office
  • Become a member today

    Already a member? log in

    Most Popular Articles

    Fannie Mae, and the housing market’s inflation problem

    Another month of steadily increasing home prices and insatiable demand led Fannie Mae’s Economic and Strategic Research Group to alter many of its 2021 predictions – in particular, its outlook on the symbiotic relationship between the housing market and inflation measures.

    Jun 16, 2021 By

    Latest Articles

    Doug Duncan and the housing market’s supply conundrum

    The housing market has suffered due to high material prices, spend-anything buyers & a lack of supply. A return to normalcy will require big changes. HW+ Premium Content

    Jun 18, 2021 By
    3d rendering of a row of luxury townhouses along a street

    Log In

    Forgot Password?

    Don't have an account? Please