With the constant fluctuation of the real estate market, it becomes increasingly challenging for appraisers to provide accurate estimates. Lenders and homeowners often count on appraisers to give them objective and up-to-date property value assessments, highlighting the importance of their role.
The Role of Market Trend Analysis
Market trend analysis is a crucial contributing factor of accurate appraisals. Secondary market agencies such as Fannie Mae and Freddie Mac require real estate appraisers to find and clearly define market trends and use that data to properly report time adjustments. To ensure complete transparency, these reports must come with the methods used to determine said adjustments.
Market Adjustments Are Necessary
According to the National Association of Realtors, “market adjustments are modifications made to comparable sales data to account for changes in market conditions between the comparable property’s sale date and the appraisal date.” Reporting such amendments is important to keep valuations updated and credible for real estate agents and homebuyers alike. For instance, when a property’s value has increased, a time adjustment shows the upward market trend. Similarly, when values depreciate, appraisers must represent that in reports to avoid overvaluing the property.
Time Adjustments Present a Challenge
Believe it or not, the issue comes with the act of making such appraisals. Rural areas or unique property types sometimes do not have as much recent data to work with. In some cases, appraisers have no choice but to use old sales data and risk inaccurate valuations.
Technology Offers a Solution
Valuation consultancies such as Walitt Solutions offer courses and workshops to inform appraisers on how to use technology and market data to improve their valuations. Software providers also provide adjustment calculators that appraisers can use to apply their market adjustments more quickly and efficiently. This tool cuts out the middleman when it comes to calculating and reporting, as it can aid in both areas. Even artificial intelligence gives appraisers a hand as it relates to the complex and time-consuming parts of the valuation process.
As long as appraisers use the resources available to them in an ethical and responsible way, they can navigate the challenges that a dynamic real estate market naturally bring. To stay updated on these valuations and the real estate market in general, keep up with The Connolly Agency and our weekly blog posts!
If you or someone you know is looking to buy or sell a home, contact any of our professional realtors. Otherwise, contact our Avon by the Sea office by calling 732-361-0800.