Appraisals were largely a matter of course before the 2006 housing crash. The prices rose steadily and any appraiser could just give a number to the buyer to close the deal.
It didn’t merit a closer inspection as long as there were comparable numbers in the area.
Many complain that appraisers are putting more pressure on the market. This is the first time that realtors have seen appraisals negatively affect their business.
These numbers are quite stark.
Last year, 10% to 12% of contracts were cancelled.
Closeds delayed by 10%-13%
16% to 20% of transactions reported that they were able to negotiate a lower price following the appraisal
In June 2010, 16% of realtors reported contract cancellations, whereas it was only 9% the year prior.
In response to the housing bubble burst, new regulations were also introduced with unintended consequences.
Instead of protecting the independence and autonomy appraisers, they have created many new problems.
Additional comps can slow down the process and cause deals to break down.
Lack of comparables is the biggest cause of pain.
This trend will only improve when the housing market stabilizes, and sales numbers return to normal levels.