The Pendulum Swings to the other extreme:

Low Appraisals are Hurting Home Sales

The appraisal industry has taken a hit due to the crisis in the mortgage banking industry and mortgage fraud.   There were a new set of guidelines developed by the regulatory commissions to create more œarms length compliance between Appraisers, Lenders, Buyers, Sellers, and Realtors.   As a result, lenders must now use a œlottery system to assign an appraiser to value a home under contract.   So what?   Well¦This means that you could end up with an appraiser who doesn™t regularly appraise homes in a specific area, and therefore, doesn™t know the local market.  

I had a situation recently where we had a contract for $239,500.   The buyer was willing to pay that for the home.   The appraisal came in at $225,000!   Both myself and the Buyer™s agent felt this was a low estimate of the value of this home.   But, the lender used the appraisal.   Needless to say, the buyer wanted to pay $225,000, and my seller wasn™t going to sell for that.  He asked me¦ How can market prices rise if the appraiser is looking at past sales??? Good question.   Anyone got any answers?