WASHINGTON — All sorts of things can sink a housing deal in this fragile market — one of them is a low appraisal.
According to the National Association of Realtors, a third of real estate agents reported low appraisals delaying or ruining housing contracts this summer.
That’s up significantly from the summer before.
Eldad Moraru, of Long and Foster, says buyers and sellers are negotiating for months on end and by the time they get to the appraisal process, they want it to be over.
“Everyone is negotiated out,” he says.
He adds it doesn’t take an appraisal to be off by very much to cause waves and delay or even kill a deal.
Experts say there are a couple of factors as to why low appraisals are occuring. There are many distressed homes in the market and in the past an appraiser could toss out a foreclosure and not count it as one of their comparables. But now, many markets are made up heavily of foreclosures and short sales and they cannot be ignored.
Other experts say lenders are requiring more thorough home appraisals and more of them.
Moraru says to protect against a low appraisal, sellers should price their home correctly and fairly. Make sure the price fits in with comparables in the neighborhood because that’s how appraisers come up with their figures.
He also advises real estate agents to provide as much information as possible to the appraiser. Let them know about that new roof or new addition.
He says once the appraiser comes up with a price, it’s very difficult to challenge it.