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Appraisals Causing Glitches
November 14th, 2012 9:34 AM

Homes are moving, sales are up, and the market is recovering, but there are still problems with low appraisals, which are holding back many would-be sales. 

Most appraisers are competent and provide good valuations that are compliant with the Uniform Standards of Professional Appraisal Practice.  However, appraisals generally lag market conditions and some changes to the process have been causing problems, including the use of out-of-the-area valuators without local expertise or full access to local data, inappropriate comparisons, and extreme lender demands.  As a result, some contracts have been cancelled, delayed or renegotiated to a lower sales price as a result of low valuations.  This makes some homes selling for less than replacement construction costs!

Some appraisers are using foreclosures, short sales and run-down properties as comparable homes are are not making adjustments for market conditions or the condition of the property.   Another major concern is that some appraisers are operating under strict and limited parameters due to bank lending criteria, which has become overly strict since the market bust. 

Fortunately, the level of distressed sales is reducing greatly to be used as comparables.  But in the meantime, buyers and sellers need to be aware that there are problems with some real estate appraisals and they have the right to communicate with appraisers and lenders about errors or concerns with individual valuations. In some cases, a second appraisal may be justified and may correct the problem.  Don't just accept a low appraisal, but be pro-active and have proof of why you feel the home should be valued higher.  It is well worth the effort and will help to increase real estate property values for the future. 

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Posted by Barbara Doeringer on November 14th, 2012 9:34 AMPost a Comment

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