Appraisers are Getting Tougher
As real estate values have slipped the last few years and with lenders tightening their standards for writing mortgages, appraisals have become much more stringent.
If you are not familiar with the basics of an appraisal, check out What is an Appraisal?
In the heyday of real estate appreciation, and by that I mean 2005 and the several years prior, nearly every house appraised for more than it sold for. At that time lenders did not scrutinize appraisals as they do now; after all since property values could only appreciate, or so people thought, why would anyone be concerned about appraisals. As a result, appraisers could be a more lenient order to reach an appraised value that met or exceeded the purchase price.
Now with homes values down and lenders wary of giving mortgages to anyone except the most qualified, lenders are closely reviewing appraisals. Appraisers now are much more careful on selecting comparable sales and making adjustments as they know that lenders may question the appraisal and the decisions that went into producing it. On top of that there has been a lot of media attention to the sky high appraisals of recent years contributing to the current state of the real estate market, adding additional pressure on appraisers to produce accurate numbers.
What this boils down to is that many homes are not appraising for their purchase price and as a result those purchase prices have to be lowered to the appraised value or the sale falls apart.
Comments(1)