Home appraisers are continuing to be an obstacle in the way of sales, with more than a third of real estate professionals blaming them for delaying or canceling proposed contracts in the first six months of this year. This marks a staggering increase of 29% on the number of deals blocked by appraisers in 2010, according to a report in SmartMoney.
Mortgage lenders these days are apparently demanding even more thorough appraisals than before, and this in turn leads appraisers feeling they are required to pull sales, which may or may not included short sales and sales of foreclosed homes. It used to be that appraisers could cite just two or three recently sold properties, but nowadays mortgage lenders are asking for two or three times as many, according to the Mortgage Bankers Association president, Dave Stevens.
The problem according to Stevens is that appraisers often feel forced to value homes at lower prices than what the already accepted offer is. This is happening more and more frequently, claims SmartMoney, and the result is that either the seller must reduce his or her asking price, or the buyer has to shell out more than the appraised value.
According to data provided by the NAR, for the three months up until October 1st, 13% of real estate professionals claim that they had to renegotiate contracts following a low appraisal.
SmartMoney notes that buyers are recommended to insert a clause into any contract they make, stating that they will be able to receive their down payment back if they are unable to obtain financing, or if the appraised value of the home is less than what is indicated in the contract.
May be laughable to some but I find it true.
I'm sorry, but I can't help but laugh at this.
Everyone loves regulation, and regulation is keeping the housing market on its' back.
F&F interest rates: 50 bp lower than non-F&F, so the plebs can't resist applying to those instead of "nonconforming" mortgages. F&F appraisal guidelines: last nearest 3 houses sold, so since distressed are running at 1/3 of all sales with a minimum 25% discount to non-distressed, the loan's guaranteed to be rejected because the appraisal came in too low. The costs in money, time, effort, and emotion of the application are too high to try again.
Well, my peasants, if you want to not get a crappy low-ball deal-killing appraisal, you can tell the appraiser to only reference non-distressed sales.
You have to love this: short listings are running at a 2:1 ratio to REOs now. Think about that. Everyone thinks they have to short because of this fatal infinite loop described above.