REALTORS® surveyed by the National Association of REALTORS® (NAR), say that low valuations on appraisals are causing their seller’s problems ranging from delaying the sale to renegotiating the price to even killing the deal. Of the REALTORS® that responded, 11 percent say a low valuation on an appraisal cost their seller a sale in the past 3 months, 9 percent said it caused a delay to a sale and 15 percent said a low appraisal resulted in the seller having to renegotiate and agree to a lower price.
NAR says Major Appraisal problems reported by Realtors® include:
- Some appraisers are using foreclosures, short sales and run-down properties as comparable homes, and are not making adjustments for market conditions or the condition of the property.
- Appraised values that do not reflect market conditions such as rising prices, the presence of multi-bidding and low inventory.
- Appraised values are very inconsistent and fluctuate widely.
- Out-of-town appraisers, who are not familiar with the area or local market conditions, are being used.
- Turn-around time by both appraisers and banks is slow, which delays closings.
NAR goes on to say they have been advocates for an independent appraisal process as well as increased education requirements to allow appraisers to produce the most accurate reports possible. However, NAR reports that appraisers have faced undue pressure — whether from a lender or an AMC — to complete appraisals using distressed sales as comps, to complete an appraisal in an unacceptably short time frame, and to complete a scope of work that is not justified by the fee being offered.
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