If you are trying to sell your home or are in the real estate business you know one things is true these days. Finding a buyer is just the first step. Getting an appraisal to work with the offer is often a deal breaker.
According to a report in the Free Press, 40 percent of deals in Detroit are blowing up because the appraisal is coming in too low.
Appraisals, many of them inflated during the market boom, have fallen to Earth. While appraisers argue that guidelines passed in 2009 protect home buyers and lenders by giving them a realistic value for the home, Realtors and homeowners say the appraisals are too conservative.
This further depresses the housing market because most buyers are not able to put up the extra cash if there is a huge gap between what they offer for the house and what it’s appraised for — and sellers don’t want to lower the asking price if the appraisal comes in low. via FreeP
Now don’t blame the appraiser. They are the ones caught in the crossfire.
The story goes back to the mid 2000’s when appraisers were pressured by the real estate agents and the lenders to make the numbers work. If they gave an honest appraisal and blew up a deal, odds are they would not find any work again. The banks wanted to lend on anything and the agents wanted to sell anything.
So what if the homes were overvalued, it really did not matter.
So when it all blew up regulators changed the rules for appraisers.
No longer could the lender hire an appraiser directly, he had to do so through a 3rd party.
The 3rd party appraisal companies wanted to make money so they are hiring the lowest cost appraisers who may not know the local market as well as they did before the bubble popped. And they know for a fact if they come in too high they will never get work again from the 3rd party referral company.
So they are coming in low. They want to work too.
And that is why getting an appraisal is so tricky these days.
We made it that way.
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