As we move to a seller's market with low inventory and many multiple offer situations, Buyers and Sellers face an equally frustrating challenge. Housing prices are being held back by low appraisals. Supply and demand are creating an environment where home price appreciation is possible, only to have appraisals cause the contract to fall out. In an article published by the National Association of Realtors, major problems reported by Realtors® include:
• Some appraisers are using foreclosures, short sales and run-down properties as comparable homes, and are not making adjustments for market conditions or the condition of the property.
• Appraised values that do not reflect market conditions such as rising prices, the presence of multi-bidding and low inventory.
• Appraised values are very inconsistent and fluctuate widely.
• Out-of-town appraisers, who are not familiar with the area or local market conditions, are being used.
• Turn-around time by both appraisers and banks is slow, which delays closings.