Home Appraisal Price-Gap Analysis Shows That Home Appraisals Were Higher Than Sale Prices 51% of the Time
It’s fairly common for home appraisals to differ from actual sales prices, particularly with recent record home price appreciation seeing home prices skyrocket. Appraised values indicate what a licensed or certified appraiser believes a home is worth, while the sales price is what a buyer is willing to pay for it. As an appraisal management company, CSS tracks these variances and regularly analyzes this data for the major markets within our operating footprint.
Recently we conducted a data analysis on the appraisal-price gap for the 10 states with the highest volume in our 19-state and DC footprint. The analysis provides the percent of homes that were over-appraised, under-appraised and appraised at the same value as the sale price (within $2,500.00).
According to the data, home appraisals were higher than sale prices 51% of the time in the first half of 2024. The gap between appraisals and sale prices for the first half of this year was the highest that we have seen since the start of the pandemic in 2020. That year, according to CSS data, 42% of homes were appraised above the sale price compared with 42% in 2021, 46% in 2022 and 50% in 2023. As of June 2024, the average over-appraisal was 9% among all markets analyzed.
Among the 10 states analyzed, Kentucky had the highest percentage of orders (73%) that appraised over the sale price for the first half of 2024 with an average over-appraised value of 10%. New York had the lowest percentage of homes (34%) that were over-appraised with an average over-appraised value of 5%. North Carolina had the highest average over-appraised value at 33% for the first half of 2024.
In the under-appraised category, New York had the highest percentage of homes (14%) that were under-appraised with an average under-appraised value of 9% for the first half of 2024. Virginia had the lowest percentage of homes (3%) that were under-appraised with an average under-appraised value of 9%.
The growing gap between home appraisals and actual sale prices underscores the challenges of providing accurate valuations in a rapidly appreciating market with limited inventory, emphasizing the importance of market-centric valuations.
