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Homeowners and appraisers are growing further apart on their opinions of home value, according to Quicken Loans survey data for March. Appraisals came in 1.77% below homeowner estimates. This gap is up from 1.69% in February.

This is the case despite the fact that home values were up 0.63% in March, according to appraisal data. Values were up 3.30% on the year.

Home Price Perception Index (HPPI)

Gap Between Homeowner Estimates and Appraisal Values Continues to Widen - Quicken Loans Zing Blog

Although homeowners generally think their homes are worth 1.77% more than appraisers do, the trends vary widely across the country. In many of the hotter housing markets, particularly in the West, appraisals are actually surprising many homeowners by coming in higher than they expect.

Quicken Loans Vice President of Capital Markets Bill Banfield explained some of the causes of this difference of opinion.

“The national average shows appraisals lower than homeowner expectations, but some cities are bucking that trend,” said Banfield. “With prices sprinting forward in many of the booming housing markets in the West, it can be difficult for homeowners to keep up with appraisers who are on the ground examining real estate price changes every day. This study is one more reminder for consumers to keep an eye on their local market before selling or refinancing. The state of their local market could affect their home’s value – on either end of the spectrum.”

Briefly taking a look at regional data, homeowners in the West were closest to appraiser estimates. They overestimated home value by just 1.46%. Meanwhile, homeowners in the South and Northeast were off by 1.75% and 1.94%, respectively. Midwestern homeowners brought up the rear, with a difference of 1.96%.

Of the metropolitan areas surveyed, Denver has the most underrated property values, with appraisals coming in 2.69% above expectations. Philadelphians continue to trend the other way, overestimating home value by 3.20%. Riverside, Calif., gets this month’s bragging rights for being closest to the button: Homeowners there overestimated property values by just 0.04%.

Home Value Index (HVI)

Gap Between Homeowner Estimates and Appraisal Values Continues to Widen - Quicken Loans Zing Blog

Part of the reason homeowners continue to overvalue in their homes may be because they know that, in general, those values are rising. That trend continued in March, with appraised values going up 0.63%.

Banfield said the warmer weather is marking the start of home buying season, and more buyers are competing for fewer homes.

“Real estate signs are beginning to pop up, even before leaves appear on the neighborhood trees. As home selling season gets started across the country, enthusiastic buyers are battling for available homes,” he said. “The increased attention to home sales has led to more competition for a relatively small inventory of homes, continuing to fuel the rising prices.”

On the regional side of the data, the Northeast had the biggest monthly rise in property value, up 1.78% and 3.85% on the year. The Midwest was next, up 0.86% and 2.11% annually. The South followed, up 0.84% and 4.67% since this time last year. The West had the smallest monthly increase, up 0.71% and 3.61% annually.

With home values on the rise, it makes sense to start looking now before we hit the summer months. If you’re looking to take cash out, you can still refinance at low rates. If you’re ready, you can get a purchase preapproval or refinance online through Rocket Mortgage® by Quicken Loans®. If you’d rather get started over the phone, one of our Home Loan Experts would be happy to work with you at (800) 785-4788.

The Quicken Loans Home Price Perception and Home Value Indexes are released on the second Tuesday of each month on the Quicken Loans Press Room.

This Post Has 24 Comments

  1. I agree with Mary Ann.

    Appraisers are looking backwards, not at today. I had a home in contract for $225k appraisal came in at $215k. Seller would not sell at that price. Parties agreed to $220k. $220k is what the house was worth. The appraisal was wrong. It’s called the market.

    Giving one person the authority to put a value on a home doesn’t make sense. Why are agents not appraising homes before they are listed and using that price as the listing price? Because the market sets the price.

    1. Hi Steve:

      The reason appraisers list the prices is that they can be independent. If the agents listed the prices, they might always list high knowing they could sell that property in the future. Appraisers should definitely be trying to be as up-to-date on the market as possible, though.

      Kevin Graham

  2. I speak only from my own experience where I was royally #@#X#@ by an appraiser who came from out of area where property values allow for larger homes to be built at low more affordable prices due to the vast vacant land still available where new housing tracts are a dime a dozen. I am convinced he came into our rural community of older homes, with ample freeways linking communities closer to the job markets in any direction, with limited housing due to mountains and hills topography, (an amenity in itself) with a mind set that ignored the subtle nuances in the comparable sales such as location, association history, and amenities offered in other complexes of similar vintages. I contested the appraisal with the department of appraisers in Sacramento, and submitted my findings supporting my sales price to no avail. }”The appraiser is always right”). After I lost the sale and subsequently the listing, three months later the property sold for the price I had listed at. This happened in later part of 2015 when the market had turned around and continues to do so. Not necessarily a Quicken loan but a general view of how the restructing of the banks having to throw out their appraisals to an “open” pool to be grabbed by the few appraisers who were able to survive the reduction of a fair appraisal fee now governed by Appraisal Management Company. Now same complex sports $400k plus as do the complexes that cannot compare when it comes to the amenities I mentioned. Go figure. I had appraisal college units under my belt so I was not working with a sales price drawn randomly out of a hat.

    1. Hi Lucy:

      I certainly sympathize with your situation. It’s definitely important that the appraiser knows the area.

      Kevin Graham

  3. As a licensed and practicing Realtor for 20 years I have experienced many instances when clients have come to me with information off Zillow that I had to correct with local and real data off the multiple listing services. Often they come with data on homes that they believe are for sale which are not, or pricing on homes which the real time market does not support.

    This causes me consternation with having to spend a lot of unnecessary time providing real additional data to show what is really happening in our local markets.

    Zillow and “friends/family members who have bought a house and are now expert real estate agents” are the biggest obstacles to helping potential home owners and buyers from being grounded in reality about home prices.

  4. I know there’s a lot of skepticism about Zillow’s home estimates so I can only speak for myself.

    We refinanced with Quicken a few years ago and their estimate was only a couple of hundred dollars below what Zillow had us at.

    If you keep in mind that the Zillow estimate is the center of a range both higher and lower I believe you’re find it a great tool to keep track of how much your home has increased or decreased in value.

    One more thing: Zillow is quite upfront in the fact their accuracy depends on your home is location. In fact there are some cities and areas they can’t make an estimate of home value because some local governments restrict them from necessary information to make an estimate. It’s all right there on the site
    Anyway, that’s my story and I’m sticking with it (-;

      1. You are so right Kevin! Zillows is really good at giving estimates of market value which is not the same as the appraisal value. The appraiser actually comes out and appraise property in person and some times the remodeling or renovation done on a home is not listed in Zillows report. Zillows is good for Sellers as a guide not an exact and someone wanting to ReFi

  5. So many people think they are sitting on gold mines in their homes. They get furious when the appraisal doesn’t come in at their outrageously over-inflated self-estimates. I agree with the article. Do your homework regarding home sales in YOUR AREA! Mortgage companies want comps that are within a mile of the subject property and are comparable-meaning they have the same number of bedrooms, similar square footage, similar features. You cannot compare a 2 bedroom, 1,000 sq ft home to a 3 bedroom 2,000 sq ft home even if it is right next door! Also, people need to take care of their homes. Many homeowners want to refinance but haven’t made any updates or upgrades to their home. You can’t compare your old home with no upgrades to a similar home that has been completely remodeled. Wake up and smell the appraisals people! They are NOT just opinions!!! They are based on SIMILAR comps near the home!

    1. Hi Debbie:

      It’s true that appraisals are based on recent sales of properties similar to yours within the area. That said, it can be difficult for homeowners to gauge because they hear that, in general across the nation, property values are going up quickly. That’s why the Metropolitan data in this survey is so important.

      Kevin Graham

    2. ” Although homeowners generally think their homes are worth 1.77% more than appraisers do…”
      The problem with this statement is that appraiser’s don’t report what they think…they report what the market thinks by outlining what other people in their market were willing to pay for similar properties.

      Of course homeowner’s always think their home is worth more than what someone else may be willing to pay for it…they are emotionally and financially invested in it. And if they really think their property is worth 1.77% more than an appraiser, the should call their local assessor and let them know….oh wait….then its not worth half that much. So the opinion of the homeowner shouldn’t carry much weight because his opinion is based on what is motivating him to come up with his own number. Cash out refi? Prefers high value. Paying off spouse in a divorce settlement? Prefers low value. Property Tax purposes? Prefers a low value. Selling? Prefers high value. The owner’s opinion is always based on his motivations. Its a moot point.

      1. Hi Judy:

        You’re right that the seller definitely has a different motivation for every scenario. That’s why the appraiser has to be independent. You’re definitely right that it’s about market prices and I can phrase things differently in the future.

        Kevin Graham

  6. From your first chart (Home Price Perception Index (HPPI)) it appears that the difference is less now than it has been in the past. The first years of your chart (2008-2012) show a much greater disparity between the Homeowner estimate versus the Appraised value so your article and article title are misleading. Your first paragraph contradicts the chart as well as you can see the % difference is much closer now than it has been in the past except for 2013-2015 where owner values matched or were slightly higher than appraised estimate.

    1. Hi Michael:

      When we refer to the trends, we are referring to the last several months. This report is released monthly. The graphs do cover a number of years. I think that’s where you’re seeing the difference. Appraisals have been lower than homeowner estimates since February 2015. Also, the difference between homeowner and appraiser estimates has been widening for the last four months.

      Kevin Graham

  7. As a real estate broker, your article is incomplete.

    Suggest you point out market value is what a buyer and seller agree on; the appraisal is part art and part science; the appraisal ultimately is one person’s opinion; appraisals are to justify the loan not the final,end all decision of value.

    My experience is that appraisers used by quicken do a poorer job at coming in at higher values than appraisers from local lenders. Thus, I am not surprised at the data you cite.

    The impact for me is to avoid Quicken except on refinances.

    MaryAnn Cochran

    1. Hi MaryAnn:

      As someone that works in real estate, you should be aware that no mortgage lender can legally influence an appraisal. All the appraisers we use are independent contractors hired through an appraisal management company. We don’t have Quicken appraisers. In addition, real estate values are very local in nature. The market in one area is very different from the market in another. I’ve forwarded your note on your past experience with appraisal values on to our client relations team to look into, but I did want to make sure I clarified that point.

      Kevin Graham

    2. As a real estate professional, I agree with MaryAnns remarks. As an example: we had a situation where 2 different appraisals were done on the same property within weeks and local appraisers opinion agreed with contract price, while Quicken appraiser thought property was worth $20,000 less. The problem is likely to get worse in our appreciating market, because appraisers use use old sales data that does not reflect current market demand and prices. To conclude, there isn’t necessarily a gap between home owners opinion of value & appraisal value, but there is a gap between market opinion and appraiser’s opinion.

      1. Hi R.B.:

        I’m going to get this to our client relations team so we can possibly look into what happened with your deal. However, I do want to correct one thing you said. All of the appraisers we use are independent contractors. There is no such thing as a Quicken appraiser. They’re independent and based in your local market. That said, I’m going to have someone look into this.

        Kevin Graham

    3. I agree with you Mary Ann. I have had not one good experience with Quicken. Dealing with them is kind of like getting a root canal, sure the cavity is gone when they are done, but you know you have been in a fight. I actually just had a buyer lose out on a multiple offer situation because they used Quicken as their lender. Which is the segue to my comments on the appraisal process. It should be a validation of price. How can one persons subjective opinion, appraiser (and in many cases a failed Realtor) over ride what 5 buyers and 6 real estate professionals (including the listing agent and 5 buyers agents) value a property at in a multiple offer situation? The appraisers are acting like they and they alone will control the value. Even more importantly they are not that good to determine the value to be 1.7% less than what a home sells for and then be applauded as the untouchable advocate for the buying process. Because of AMC’s , most good, quality and experienced appraisers have left my market (I am in Chicagoland so its not Podunk Iowa). I bet if we looked in the weeds we would find national lenders to have their fingers in the AMC’s . But back to the appraisers, to not even be open to hearing or processing any other information that affects the value other than theirs is ridiculas. Now I hear the trend will be to start reducing appraised values by any closing cost credit. I get we don’t want another unsustainable spike in values, but natural progression in values is healthy and it should be determined by more than one persons subjective (and in some cases uniformed) opinion. Just because they can fill out the forms in no way makes them an expert.

      1. Hi Bryan:

        I’m sorry you’ve had this experience. I’m going to have our client relations team look into your issue and reach out.

        Kevin Graham

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