San Diego Appraisal Valuation Becoming an Issue During Refinance

San Diego County’s record-low interest rates are creating a refinance boom for home buyers and existing homeowners seeking to refinance. Unfortunately, low appraisals are making it difficult, or near impossible, for some borrowers to take advantage of the current low rates.

The average homeowner is aware that property purchased during the peak of the buying market may have fallen in value. A San Diego homeowner recently discovered, upon reviewing their appraisal during a refinance, the value of their home purchased just four years ago was now showing an appraisal value less than the mortgage currently in place – thus threatening their refinance.  Upon questioning the appraisal, it was discovered that the values were based on older homes located a few blocks away, and weren’t directly comparable to their home.  After submitting a formal rebuttal, the borrowers requested a second appraisal. The new appraisal placed the property value high enough for them to refinance. The new mortgage that will save them an estimated $175,000 over the life of the loan.

After almost six years of falling home prices, such experiences have become common. Approximately one-third of real-estate agents reported that low appraisals had resulted in the cancellation, delay or renegotiation of a purchase, according to an April survey by the National Association of Realtors.

There are steps you can take to improve your odds.

  • Borrowers can’t pick their appraiser, but they can accompany the appraiser during the inspection, pointing out improvements that add to the home’s value.
  • Borrowers can provide the appraiser with comparable sales to be used to support the valuation. To do this, the homeowner should look for true comparable properties in their neighborhood.  This may involve driving around and seeing what properties have similar upgrades, etc.
  • San Diego homeowners can contact their neighborhood Real Estate Agent and ask if they have better comparable information or something to confirm the closer value of the home. If an agent name is known, contact the San Diego Association of Realtors through their website.
  • During the appraisal, make sure to point out items such as upgraded kitchens, baths and flooring.  Items that can add value are granite countertops, tile or hardwood flooring, and stainless steel appliances.
  • San Diegans doing research on home improvement and appraisal can find articles online to also assist with home improvement ideas that will increase the value of their home.
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