Real estate appraisal service providers are becoming a bane to real estate agents who are doing their best to survive during the struggling market. Agents have been losing sales after sales because the house valuations made by appraises are coming in far below the asking prices.
According to the National Association of Realtors, almost one out of every four realtors has reported at least one client losing a home sale because of the extremely low appraisal.
The National Association of Home Builders also reported that about one-fourth of total new home sales have been botched up because the appraisals were too low. Home builders said that the prices of brand new homes should not be based on the prices of distressed properties.
In response, real estate appraisers argue that distressed properties are part of the housing market. A house appraiser in San Diego, California, Katherine Scheri, said she has been branded a deal killer because her appraisals are considered too low by agents.
For instance, her recent appraisal for a house originally priced at $310,000 was $30,000 below the price offered by the buyer. When the agent told her she is going to ruin a buyer?s dream, she shot back that the agent should care that the buyer could lose $30,000 from buying the house.
According to real estate appraisal service providers, they cannot ignore the prices of comparable foreclosure home sales because a huge percentage of house sales are distressed sales. In 2009, around 40 percent of total house sales in most parts of the country were short sales or foreclosure sales.
In some markets, the percentage is even higher. In Phoenix and in Las Vegas, the distressed sale percentage has surpassed the 50-percent level.
Home appraisal professionals determine house value by examining recent comparable sales in the area, making adjustments for features like basement renovation or excluding features like above-ground swimming pool. Generally, appraisers do not use distressed sales for comparison, but in cases where foreclosures are the only sales in the area, appraisers cannot avoid considering them.
According to San Diego-based appraiser Scheri, some buyers are willing to pay much more than what the properties are worth even in neighborhoods where foreclosure sales comprise the majority.
To pursue sales of homes valuated low by real estate appraisal service providers, real estate agents can advise buyers to pay a portion of the price in cash to encourage sellers to reduce their selling price.
