Why was my bank appraisal so much higher?
Anyone involved in a relocation can tell you that a bank appraisal and a relocation appraisal result in differing values. Always a hot topic with employees and employers alike, it’s important to understand the dynamics of each.
The intended use of a relocation appraisal is to assist an employer in facilitating the employee relocation process by establishing a future anticipated sale price; whereas, the intention of a bank appraisal is to determine the present value for mortgage lending purposes. Please keep in mind that the relocation appraiser is trying to predict the future and tell us what they feel the home can sell for within 120 days. On the other hand, a bank wants to verify the present market value as collateral for a loan that could run 30 years.
The methodologies required for both appraisal types also vary widely. A relocation appraiser must consider market changes since the date a comparable sale closed in addition to determining present market trends and then forecast how those trends will affect the future sale of the property. A mortgage appraiser is not required to consider these factors. Additionally, a relocation appraisal requires a prospective analysis and a mortgage appraisal is a retrospective analysis only.
Most likely your home is your biggest asset. As an employee being relocated, our advice would be to get involved in the appraisal process; interview the appraisers up front; ask questions; and provide data to the appraisers that you feel is pertinent—your real estate agent can assist with all of this.
As a corporate relocation professional, we advise that you encourage your relocating employees to take the time to understand and insert themselves in the process.
Posted on 11/3/2009 in Domestic Relocation | Comments (0)
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