We see this situation all the time – and buyers end up extremely frustrated!
Someone will buy a home for a $1 million, put $500,000 of improvements into it, and then try to refi with a higher appraised value within 12 months in order to pull enough cash out to replenish the money they spent on the remodel.
The problem? Appraisers are hellbent on correlating to the purchase price within the first 12 or even 24 months in softer markets, irrespective of improvements.
Solution: If buyers want to convince appraisers their home is worth more than what they paid for it within the last 12 to 24 months, they need to make a strong case with a clear list of improvements (in writing), a list of the costs of the improvements, and as many receipts as possible. They should also work with their lender to come up with legitimate comparable sales they can share with the appraiser.
Verbal discussions about improvements, with rightfully skeptical appraisers (because they hear so much BS), are rarely effective in these situations. In addition, appraisers are more willing to increase values when they can cite (and even show) hard and fast improvement data in their reports.
Why Fannie’s Price Survey May Be the Most Important Information We Can Share With Potential Buyers.
Fannie Mae just released its Home Price Expectations Survey Results – and it may be the most valuable table we can share with our clients right now (the full table is set out below).
The reason is this: Fannie surveyed TEN prominent economists and macro analysts, and NINE of them are predicting home price appreciation.
The average appreciation prediction (amongst all ten) for 2026 is 2.4%, and the average over five years is a whopping 20%!
These are prominent economists too, putting their reputations and careers on the line with their predictions.
Even better, many have extremely good track records when it comes to past predictions (particularly Barry Habib).
As I mention often, hundreds of thousands of potential homebuyers are on the sidelines because they are seeing all of the “real estate crash predictions” from the likes of Melody Wright and Nick Gerli, and even guys I cite in my blogs like Ed Dowd, and George Gammon.
The survey is excellent information to counter the crash bros – who have yet to make an accurate prediction.
