March 1st, 2011 4:23 PM

“In a rapidly moving market, the appraisal process becomes more difficult,” says Robert Davis, executive vice president of the American Bankers Association. “Home prices are still falling, and there’s a lot of people who can’t believe they’re that low.”  Foreclosures are a key factor. Market researcher RealtyTrac says foreclosed homes accounted for almost 26 percent of sales last year, fetching 28 percent less on average than non-foreclosed homes. In some markets, foreclosed homes are a greater share of sales.  Appraisers may count those to determine values of non-distressed properties, and the appraisals may not reflect the superior condition of the latter, says NAHB Chief Economist David Crowe.  Beazer Homes, a national home builder, said in a recent Securities and Exchange Commission filing that “appraisals continue to be negatively impacted by foreclosure comparables,” boosting home sale cancellation rates in some markets.   Also, since 2009, new rules have aimed to lessen lenders’ ability to influence appraisers. That’s led to more lenders outsourcing appraisal selection to other firms. They may hire appraisers who aren’t as familiar with the neighborhoods of the houses they’re valuing, realtors say.   “You get people from one end of the state appraising stuff in the other end,” says Don Hammer, manager of Realty Executives in Paradise Valley, Ariz. In his office, about half of all canceled sales are appraisal-related, he says.

 

 

Regards, Bill S.

 

Bill Salvatore Realty Executives EV Owner/ Partner
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