Low Appraisals Still Causing Problems in Some Deals

The real estate market is on the upswing – but are those improvements being reflected in home appraisals?  When many potential buyers push the selling price of a home higher than the asking price – which isn’t unusual in neighborhoods where the demand is high – problems are arising because the appraisers are coming in with values that are up to thousands of dollars lower than the agreed-upon selling price.

It has become a major complication in real estate transactions when the appraised value does not reflect the local appreciation in the market.  In fact, in a recent poll conducted by the National Association of Realtors found that 33% of their agents reported problems with appraisals in the last month.  Many industry experts point to this as the single biggest obstacle to seeing a real recovery in the market.

Even professional appraisers agree this has become an issue.  Many appraisers are hesitant to make higher value appraisals because they fear they will be criticized for over-valuing the property and exposing clients to potential future litigation.  Instead, the appraisers err on the side of caution and go with a lower valuation so as not to cause concern from the reviewers at appraisal management companies that now control most of the home real estate appraisal assignments.  In many cases, appraisers are told to “revisit” upward adjustments – in essence, to get rid of them.

Read Also:  What happens if my home does not appraise?

In some cases, the low appraisal has endangered deals.  When a buyer offers thousands more than what an appraisal comes in for – even if the evidence is there that the local market has experienced appreciation – it can blow the deal.  Buyers may need to make changes to their loan requests or even renegotiate the price of the home with unhappy sellers.

The problem is compounded when an appraiser, hired by an appraisal management company, has to travel 30 or 40 miles away and has no previous information about the neighborhood and any recent appreciation trends.  A recent example saw a home that was in a bidding war which pushed the price from the listing amount of $350,000 to $375,000. But the out-of-town appraiser would not take that into consideration when arriving at the final value of the property.

Appraisers are scared to report rising values, because they feel they are being forced to deliver appraisals that should be higher.  Appraisal experts say, it’s every appraisers responsibility to arrive at valuations that really do reflect the current market and its recent changes, whether they are positive or negative, as long as they can be backed up with accurate data.

For home buyers and home sellers who want to guard against this problem, the most important thing you can do is to make sure the realty agents on both sides have accurate data on comparable sales that show just how the market has changed in the last six months.  And then make sure the appraiser sees that data.  It’s in your hands to see that your purchase or sale is not jeopardized because the appraiser doesn’t have all the pertinent information.

For more information call Colleen Kulikowski

(716) 650-0051

 

Thinking of selling your Western New York home? Interested in finding out the current market value of your single family home, condo or investment property? Then call www.BestBuffaloHomes.com at (716) 650-0051 to discuss what is happening in today’s Western New York Real Estate Market. We would be happy to give you a personalized Comparative Market Analysis for your home or assist you to purchase a home. View additional WNY Market Area Statistics here.

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All Statistics are gathered from the Buffalo Niagara Association of REALTORS®.
Properties found on this Web site may be listed with a brokerage other than the owner of this site and are displayed here via the Internet Data Exchange (IDX) system of this broker’s MLS. All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing nor displaying broker shall be responsible for any typographical errors, misinformation, misprints, and shall be held totally harmless. © 2014 Western New York Real Estate Information Services (WNYREIS), LLC. All rights reserved.
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All Statistics are gathered from the Buffalo Niagara Association of REALTORS®.
Properties found on this Web site may be listed with a brokerage other than the owner of this site and are displayed here via the Internet Data Exchange (IDX) system of this broker’s MLS. All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing nor displaying broker shall be responsible for any typographical errors, misinformation, misprints, and shall be held totally harmless. © 2014 Western New York Real Estate Information Services (WNYREIS), LLC. All rights reserved.


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