Across the country, agents and homebuilders are complaining too many appraisals are coming in low, scuttling deals. So, what’s the deal?
The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to botched appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it’s not fair to compare distressed properties to brand-new homes.
Appraisers determine the value of a property by looking at recent sales of comparable homes. They take an apples-to-apples approach, excluding or making adjustments for certain features, such as a swimming pool, fireplace, or finished basement.
Home prices in many large metro areas, hit bottom earlier this year and are recovering, data last week showed. Yet there are many neighborhoods across the country where foreclosures and other financially distressed sales are still rising.
“It used to be a very infrequent thing that you did an appraisal and the value wasn’t supported,” says Katherine Scheri, an appraiser in San Diego. “Now, it’s more common than not.” 
So, if you’re trying to sell your home in a neighborhood where foreclosures and short sales are predominant, an appraiser could determine your home is actually worth less than what some buyers may be willing to pay.
Part of the problem, critics contend, is that many real estate appraisers are now hired under new industry rules. Designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender.
Lenders may order appraisals through in-house staff or appraisers hired by outside firms known as appraisal-management companies. But neither may talk to the appraisers about the value of the property they’re evaluating.
The result, however, can mean that low-cost appraisers are hired from outside the area and don’t have the local knowledge to find homes that can be a better benchmark for regular homes.
Are you ready to sell your Nashville home and have more questions? Please email me at Josh@JoshAndersonRealEsate.com or visit my website, www.JoshAndersonRealEstate.com.
