How much do you think your home is worth? According to a survey performed by Zillow last month, over 62 percent of Americans mistakenly thought their home’s value increased or remained the same when in fact the opposite was true. Interestingly, the recent credit crunch has shown mortgage lenders are having just as much trouble placing a value on your home. In response, stronger appraisals are being required to ensure higher quality mortgages and more accurate home values.

Declining Home Values
In California, home values have been plunging across zip codes throughout the state. To help address this problem, lenders want stronger appraisals with more recent comparable sales. You can’t expect to qualify if you can’t prove your credibility; in this case, lenders want to see how mortgage worthy your home truly is.

3 Steps to A Stronger Appraisal
1. Realistic Comps. If you’re talking about a three bedroom-two bath 1600 SqFt home, lenders won’t care about the five bedroom-four bath 2300 SqFt home two blocks down. Lenders consider comparable sales of homes that are similar. If the homes aren’t similar, they’re not realistic and they’re not real “comps”.

2. Fresh Comps. Who cares if the house down the street sold for $X amount 11 months ago; this market is a financial roller coaster ride and lenders are just as scared as you. Foreclosures, short sales, and REOs have shown how sensitive home prices can be and today’s lenders cannot afford to make the same mistakes. Unfortunately, the same goes for homeowners. Before this mortgage crisis, lenders would sometimes accept appraisals with comps dating back as far as 12 months. Nowadays, you’d better tell your appraiser to include comps within 90 days.

3. Multiple Comps. Strength in Numbers. So you’ve got realistic comps and they’re fresh? Great! Now make sure you have more than just one. Lenders love stability and the more comps you provide, the more solid your appraisal appears. Your broker or loan agent can find out how many comps the lender would like to see, but it is ultimately your responsibility to press the appraiser to meet these requirements.

Realistically, most of these suggestions may seem out of your hands at first. I mean, you can’t magically create stronger comps and your appraiser is likely doing all he can to give you the strongest appraisal. But, keep these suggestions in mind because this is what mortgage lenders are keeping a close eye on nowadays. Home values are still shaky and lenders are just looking for some form of assurance - give them that assurance with stronger appraisals.

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