I can't speak for the entire country, or even the entire state of New Jersey, but I can speak for NW Bergen County, and here's what I'd say :
If there’s one thing that throws a monkey wrench in a real estate transaction more than the physical inspection, it’s the appraisal, and we all have the banks to thank for that. Banks have made it clear to their chosen appraisers they want them to err on the low side of home values. When that happens, often the banks tell the buyers they’ll either have to increase their down-payment, or renegotiate the price with the seller.
Appraisals, u nlike the market analysis a Realtor prepares for a homeowner, is very subjective, and by nature it has to be. Seasoned Realtors spend their careers inspecting homes every Tuesday and Friday (inspection days in NW Bergen County) so that when they’re called to prepare a market analysis, they know before they do the analysis the homes they’ll be considering as “comparables.”
Often times, we’re forced to go father back to find similar homes to the subject home, but the best Realtors know how to compensate for a possible decline, or increase, in market value.
Appraisers, on the other hand, will only consider homes that have sold within the last 3-4 months, and I believe that’s a huge problem. It makes the appraisal very subjective, and when an appraisers isn’t altogether familiar with a town or neighborhood, it will be reflected in the number he comes up with.
The amazing thing about the appraisal is there is currently no process in palce to appeal the appraisal. We can appeal a parking ticket, or our property taxes --- both seemingly done by people with more local experties --- but we can’t appeal something that will seriously affect our ability to sell or purchase a home?
The National Association of Realtors (NAR) stated that as many as a third of all contracts to putchase “were canceled, delayed or reneogtiated” because appraisers came in with low numbers.
In reality, the entire mortgage process has become so tenuous that many Realtors, myself included, will be more cautious than ever about qualifying our buyers before we present an offer.
I'm suggesting to my buyers that they inform their lender of choice that they want them to choose appraisers who have both experience and knowledge about the town in which they've purchased. While there may not be an appeals process for botched appraisals, the buyer who is paying for the appraisal should get the expert of his choice.
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