Inaccurate home value appraisals have become a sticking point with sellers and real estate agents alike.
Unfortunately, home appraisals that banks are relying on to help set-up the financing for borrowers are creating a backlash of prospects falling apart at the last minute even though home prices have begun to level off and stabilize. At the same time these poor appraisals are also pushing down sale prices of homes below where they should be.
There is a growing trend where appraisers are handling value appraisals on homes in areas that they are unfamiliar with and are doing price comparisons to foreclosures and other distressed properties which should not be the case. This type of appraisal is spreading across the nation and has many people concerned with the fallout it is creating.
Today lenders are being very cautious considering the financial market situation and knowing that all eyes on them through the press. They are making sure that every tiny detail involved in each transaction is looked over meticulously.
Contracts that have been signed but not closed are used as a measuring device on pending home sales stats. Those numbers can be faulty considering the fact that while many contracts have been signed, with issues like poor appraisals that lead to the transactions falling apart at the last minute, those numbers are not reflected and thus the pending home sales stats may be inaccurate.
As an example, it was reported earlier this month that pending home sales were up by more than 3 percent from this time last year, but, by contrast, closed home sales were up only 2.4 percent which were close to 4 percent below this time last year.
Sadly, if this trend continues it could delay the housing market recovery and create a further escalation of foreclosures if the poor appraisal issues are not corrected quickly.
Despite the appraisal issues the housing market is beginning to stabilize. Recently it was reported by the Federal Housing Finance Agency that home price declines were easing and that the average U.S. home price was down only 0.1 percent from March to April of this year.