In todays housing market, where supply is very low and demand is very high, home values are increasing rapidly. One major challenge in such a market is the bank appraisal.
If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the price when performing the appraisal for the bank.
Every month, Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraisers evaluation in their Home Price Perception Index (HPPI). Here is a chart showing that difference for each of the last 12 months.
The gap between the homeowner vs. appraisers opinion had been heading in the right direction (closer to even), until this past month, when the gap widened again to -1.99%.
Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the banks 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, let's meet up so I can guide you through this, and any other, obstacle that may arise.