As banks continue to lend conservatively, financial institutions’ emphasis on home appraisals prior to granting a mortgage has become a road block for some buyers and sellers, the New York Times reported.
One problem is that there is no appeal process for a low appraisal, which can keep a seller from selling and a buyer from getting a mortgage. Another problem is that if prices in a neighborhood are just beginning to recover, and sales are taking longer to close, it can take time before the appraisal catches up with upswing.
The issue has become so pronounced that last week the National Association of Realtors accused bad appraisals of holding back the housing recovery. NAR reported that more than a third of it member’s deals were canceled, delayed or renegotiated down because of low appraisals. Some brokers are even adding appraisal contingencies into their contracts, according to the Times.
“It’s holding sellers off the market,” Jed Smith, the managing director of quantitative research for the Realtors group, said. “Sales volume could probably be an additional 10 to 15 percent higher if we had normal lending practices and if we had normal appraisal practices.”
However some appraisers have taken issue with NAR’s complaints. “Appraisers don’t set the market, they reflect what’s happening in the market,” Ken Chitester, a spokesperson for the Appraisal Institute, a professional association, said. “So don’t shoot the messenger. Blaming the appraiser for a bad housing market is like blaming the weatherman because you don’t like the weather.” [NYT] — Christopher Cameron