Home Sales Shouldn't Be Jeopardized Because the Appraiser Doesn't Have all the Market Data Facts!
Upward adjustments coming in slow from appraisers – When multiple bids push a house price thousands of dollars above what the seller is asking, which is not unusual in many San Diego neighborhoods where demand is particularly robust, are appraisers still coming in with values below the agreed upon contract number? The answer is yes. Growing numbers of mortgage loan officers and real estate agents say that appraisers are reluctant to report that local appreciation is becoming a significant complication in sales transactions.
In a recent poll by the National Association of Realtors, 33% of realtors were finding problems with appraisal reports during the month of May 2012. President of the association says, "poor appraising in the market is the single most valuation obstacle to seeing a real recovery." Even the appraisal experts agreed that this is a very troubling issue. Could it be that many appraisers are reluctant to make the upward adjustments they know to be justified by recent positive appreciation trends because they fear criticism that they are potentially overvaluing the property, exposing lender clients to costly "buyback" demands, or even future litigation?
What's worse, though, is the impact on sellers and buyers. When an appraisal comes in much lower than the mutually agreed on contract price, the buyers typically need to revise their loan request by increasing their down payment – which may not be feasible – or renegotiating the contract price with the unhappy seller. The problem can also be magnified when the appraiser assigned by the management company travels from 30 or 40 miles away, and has no insights into neighborhood appreciation trends that may be relatively recent.
The top on the list to make sure buyers and sellers guard against the "see no appreciation" value is to make sure the realty agents on both sides of the transaction have assembled accurate data on "comparable" sales or pending sales that demonstrate how the market has changed in the past six months or less and then make sure your appraiser sees that data. Your sale doesn't have to be jeopardized simply because the appraiser doesn't have all the relevant market facts.