Appraisers are increasingly taking the heat for more transactions being canceled or delayed after more appraisals reportedly are coming through that don’t meet the contract price.
In August, the National Association of REALTORS® reported that 18 percent of real estate professionals saw contracts fall through when lenders rejected loan applications or appraisals came in lower than expected. About 11 percent reported they had a contract canceled in the previous three months because of “low” appraisals.
“When an appraisal comes in low, it puts doubt in the mind of the buyer as to the true value of that property,” Richard Kassouf, the broker-owner of New Hope Realty in Brunswick, Ohio, told Cleveland.com. “And it gives them a crisis that they have to deal with, where they have to come up with more money for the down payment to allow that transaction to be completed. Or they have to negotiate the price down.”
Complaints from home owners filed nationwide about low appraisals are skyrocketing, according to states’ commerce departments.
But appraisers say it’s not their fault. They argue that many people just don’t realize how much home values have dropped since the housing boom. Plus, appraisals have become more challenging due to fewer sales available to use as comparables and the high number of foreclosures bringing down values.
“Appraisers were blamed for the run-up of the market when prices were high, and now they’re being blamed because prices are low,” says Ken Chitester, a spokesman for the Appraisal Institute. “Both can’t be true. Appraisers are doing the same thorough research and thoughtful analysis that they’ve always conducted. So, in short, don’t shoot the messenger.”
Source: “In Rough Real Estate Market, Appraisers Feel Heat for Home Sales That Fall Apart or Lag Behind,” Associated Press Newswires (Oct. 2, 2011)
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