What’s the difference between a relocation appraisal and a mortgage appraisal?
While most homeowners have experience with mortgage appraisals, relocation appraisals might be less familiar. Real Estate Analyst Sherrie Witte breaks it down in this Relo Tip Tuesday.
Complete transcript: “Hi, my name is Sherrie Witte, and I am the relocation specialist here at Plus Relocation. Some companies use the amended value option, or AVO program, to facilitate the sale of their employees’ homes. The AVO program uses two relocation appraisals to determine the value of the corporate buy-out. While most homeowners have had experience with the appraisal process, I’m here today to answer the question, ‘What makes the relocation appraisal different from the mortgage appraisal?’
Let’s look at three key differences:
One, the intent. In an everyday home purchase, a mortgage appraisal is used. This is a standard analysis of market trends designed to facilitate a loan and balance the risk of the mortgage company. It develops an opinion of current market value based on closed sales. In a relocation appraisal, on the other hand, we are seeking anticipated sale price. The anticipated sale price is a value designed for future sale and takes into consideration that the home could be in inventory.
Two, the comparable properties used. When a mortgage appraisal is completed, it can be brief, and just use closed comparable sales. The relocation appraisal is more comprehensive, and not only uses those closed sales, but it also uses competitive listings and pending sales. As so many employees are finding themselves in low-inventory markets, it is best to use those pending sales as well as those competitors to determine the most accurate anticipated sale price.
And three, the type of analysis completed. When an RMC reviews a relocation appraisal, the analysis can often include forecasting. Forecasting is unique to the relocation appraisal. It can either discount or mark up the value as it relates to current and future trends. The appraisal also includes market-change adjustments. So if your employee has seen appreciation in their market, past sales are then adjusted upwards to reflect this market increase.
Remembering that a relocation appraisal is designed to determine the value from a future buyer will help you better understand the difference from a mortgage appraisal. Thanks for watching!”