Factors That Influence a Home's Appraisal Value
When you buy a home, your lender will order an appraisal to determine the fair market value
The appraisal is important to the lender because the home serves as collateral for the loan. If you’re unable to repay your mortgage and the lender forecloses, it wants to be able to sell the home to recoup the money it lent you, so it has to make sure you’re not overpaying.
Learn more in my Mortgage-Calc.com article, Factors That Influence a Home's Appraisal Value.
Comments
Comparables cannot be older than 6 months since the sales date, must have indeed sold, not just be listed for sale, and be truly comparable to the subject property as possible. A split level and a ranch stype are not comparable. Just because the house down the street sold it may not be the best comparable. Appraisers make dollar adjustments to value for differences between the subject property and the comparables.
Market conditions can have a major effect as in a slow market there may be fewer comparables for the appraiser to use to support value and sellers may be accepting less in order to facilitate a sale thereby reflecting in lower values on the comparable sales avaible for the appraiser's use.
It is not unusual for properties to decrease in value as market conditions deteriorate.
Source(s):
20+ years as a direct mortgage lender.Home Appraisers