Realtors are reporting that appraisals are coming in lower than the price agreed on by buyer and seller. And contracts are being renegotiated because of lower appraisals.
Factors that we see contributing to the lower appraisals are below:
1.) The loan process is being more scrutinzed than ever before. Lenders want more recent sales - not older than 6 months and more active comparables.
2.) A set of new regulations were put in place last year which apply to Fannie Mae and Freddie Mac. The Home Valuation Code of Conduct is a regulation that severs the relationship between appraisers and lenders. Appraisals are now ordered through a third party appraisal management company which takes some of the money that used to be paid to the appraiser.
Homeowners are suffering from these new guidelines and regulations because these management companies are steering work to appraisers who cost the least, not those who know the neighborhoods the best! Many times, the appraisers who are the most affordable are not the most qualified.
Realtors can try to supply the appraiser with recent sold comparables but the appraiser is not required to use them. Be prepared, price your house right and hopefully you won't be subject to these appraisal pitfalls.
Tuesday, June 1, 2010
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