More Deals Falling Through
Appraisals coming in lower than the agreed-upon sales price continue to cause more real estate deals to be cancelled, recent surveys show.
In December, a third of real estate professionals reported they had a real estate contract fall through, up from 9 percent a year earlier.
The National Association of REALTORS®, along with other housing industry groups, point to low appraisals and rejected mortgage applications from a stringent lending environment as the main forces behind the high number of transaction cancellations in recent months.
Too often, foreclosures sales — which tend to be sold at big discounts — are being weighted into valuations, experts argue.
The National Association of Home Builders’ chairman Bob Nielsen has called the use of distressed and foreclosure sales in comparables in appraisals “inappropriate” and “needlessly driving down home prices.”
Sixty percent of builders say they are seeing problems from appraisals coming in below their contract sales price.
"This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market," Nielsen said in a statement in December about appraisals.
But the lending environment also needs to change for the housing market to recover and for fewer deals to stop falling through, housing experts say.
"If we simply return to the normal credit standards, verifying income and looking at the creditworthiness of an individual to stay in a property long term, we think sales will be 15 percent to 20 percent above where they are," NAR spokesman Walt Molony told Investor’s Business Daily. "There are more people trying to buy homes than are succeeding today."
Comment
-
Comment by Mark K. Caruana on February 9, 2012 at 12:52pm -
This is nothing new , " Last Year " I invited everyone on Glozal to a live broadcast about this subject . A Broker from North Carolina shared what he was doing to combat the problem . Next week other Brokers shared what they did , and successes and failures were discussed . I will look in my Vault to see if I archived them to share . I do not want to miss-represent somebody Else's Ideas . You should also be concerned about " SWEEPING " changes being implemented by Google MARCH 1 st. , unless lawsuit stops them ! you can reach me @ my private address markiec@officef5.com
-
Comment by Robert Brubaker on February 9, 2012 at 12:21pm
-
The last line in this article is the " wake -up call " for policymakers! This is
exactly what we see : There are more people trying to buy homes than are
suceeding today." Thanks Glozal for " blowing the horn " !
-
Comment by Anita McEvoy on February 9, 2012 at 11:25am -
I agree also. There are a few good appraisers still out there who take the time to try to justify the sales price but they are rare. An appraiser told me that he is supposed to use at least 2 short sales and/or foreclosure sales as comps. On top of that, we are not allowed to pick our appraisers anymore and can get one sent in from another city who does even know the area.
-
Comment by MARIA GORFINKEL on February 9, 2012 at 10:57am -
I agree, the fact that foreclosure properties are being used in appraisals most definitely brings down the prices of the homes unfairly. I wonder if it would not be fair and reasonable to have Appraisers when doing an appraisal on a property which is a foreclosure to use comparables that are based on foreclosure/foreclosed properties only. So that a fair market value could be obtained from the parameters of the subject property.
MARIA GORFINKEL
Licensed Real Estate Professional
Short Sales & Foreclosures Certified Specialist
Brokers Price Opinion Certified Specialist
MLS Multiple Listing Service
Member: Miami Association of Realtors
Member: Miami Realtor Commercial Alliance
Member: National Association of Realtors
Mobile: 786.282-8899
Email: msg813@gmail.com
The Key To Real Estate Success….Is Choosing The Right Realtor!!!
Please Visit My Website: www.mariagorfinkel.com
Your Referrals Are Greatly Appreciated.
-
Comment by Kathleen Bertinato on February 9, 2012 at 10:52am
-
One thing we can urge our sellers to realize is that an appraisal are now given a number! So it will be held for 6 months. If the seller & buyer can not compromise on the price he will not get more money from another buyer the 1st appraisal will remain in effect! Check with you Mortgage Company.
-
Comment by Butch Knightner on February 9, 2012 at 9:46am -
I've had two appraisals fall short in the last week and three of my last four transactions. Something really needs to be done.
NAR News
© 2013 Created by GLOZAL.
You need to be a member of GLOZAL - A Global Real Estate Network to add comments!
Join GLOZAL - A Global Real Estate Network