The Washington journal today reports that low-ball appraisals are pushing down real estate values even more. 16 percent of real estate agents reported a cancellation of a deal because the property did not appraise.
I'm a Realtor in Maricopa, Arizona. Our inventory is very low and many homes are under contract within just a few days. Multiple offer situations are the new normal in Maricopa AZ and Buyers' offers get rejected frequently.
In this market Buyers often need to bid higher than the asking price to get an offer accepted. When a Seller receives more than one offer on a propety, the agent will go back to the buyers and ask for their "highest and best offer". However, that could get Buyers into trouble later on, when the property does not appraise for what they offered. Appraisers determine value based on the past 3 to 6 months and often they include comparable homes that were distressed and in bad condition.
According to the Wall Street Journal, Mortgage bankers request even more conservative appraisals. It's a way to protect the banks from future problems when they offer thesee mortgages to investors. Unfortunately, it's not helping Buyers get financing and therefore it makes it harder for the real estate market to recover.
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