According to a survey by the National Association of REALTORS®, Real estate appraisals are one of the issues holding back home sales.
Recent changes to the appraisal process have been causing issues. One of the biggest concerns is the use of out-of-area valuators. Non-local valuators are limited in local knowledge which can produce inaccurate comparisons and even in some situations cause lenders to make excessive demands resulting in delays and cancellations.
"Lawrence Yun, NAR chief economist, said there has been a steady level of appraisal issues for quite some time. “Though the real estate recovery is taking place, the combined issues of stringent mortgage lending requirements and appraisal frictions are hampering otherwise qualified buyers from purchasing a home in a timely fashion, and in some cases are preventing them from buying at all,” he said."
Problems REALTORS® have reported include;
- The use of foreclosures, short sales, and dilapidated properties as comparable homes without appropriate adjustments for property condition and market trends.
- Appraised values are inadequately reflecting market conditions including; increasing prices, bidding wars, and lack of homes on the market.
- Non-local valuators lacking local market conditions, area information, and extended turnaround times due to inconsistent and fluctuating valuations.