Understanding Relocation Appraisals

Do you know the difference between a typical mortgage appraisal and a relocation appraisal? 

There are key differences between a conventional appraisal for mortgage purposes and a relocation appraisal. A conventional mortgage appraisal is obtained to determine “fair market value” or “What is the house worth today?” A relocation appraisal is completed to determine the “anticipated sales price” or “What is the probable selling price of the house within the forecasted marketing period?”

When an employee puts their home on the market through a corporation’s relocation program, the focus is on the anticipated sales price within the required timeframe – typically 120 days or less. When an appraiser performs a relocation appraisal, recent closed sales are considered, but competing listings and pending sales are also considered. The appraiser determines a forecast of the likely sales price, considering the dynamics of the neighborhood at the time of the relocation. For example, if the typical marketing time in the area is six months, and your company requires a 90 marketing period, the appraisal may need to be adjusted.

Relocation appraisals are typically reported on the standard Worldwide ERC® (WERC) Residential Appraisal Report form, the industry's accepted relocation appraisal format. It is a form-style report that requires substantial narrative components and addenda to adequately address needs and concerns. The relocation appraisal has a specific set of definitions and guidelines for appraisers, which differ substantially from other types of appraisals.

Key differences include: