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Problems Persist, But Appraisals Are Improving





While low home values continue to be an obstacle in the way of a full housing recovery, more and more markets in recent months have experienced home-price improvements. Although home prices are up in some areas, many real estate agents, homeowners and homebuyers alike are frustrated that appraisals aren't keeping pace with current home-price appreciation.

Past prices don't always capture the momentum shift in a rebounding community, says Peter Grabel, a senior loan officer at Luxury Mortgage in Stamford, Conn. "Appraisals look backward in time, whereas the market looks forward in time."

According to a recent survey from the National Association of Realtors, 34 percent of Realtors reported having had a problem with an appraisal within the last three months. In addition to not keeping pace with current price improvements, Realtors also noted foreclosures being used as "comps" (information on recently sold comparable homes), out-of-town appraisers and slow turn-around times as being ongoing issues with today's appraisals.

Add in the fact that buyers and refinancers often pay around 400 dollars per appraisal and these issues are particularly frustrating, Grabel says.

Don't blame the messenger

Richard Borges, president-elect of the Chicago-based Appraisal Institute, says that many people find fault with the appraiser if an assessment comes back lower than the price the seller and buyer negotiated, but skilled appraisers take a lot into consideration when evaluating a home in order to determine the market price.

Read: Ho w to challenge that low appraisal

"Appraisers look at the condition of a property, the competition a property has and the buyer for that type of property in that area," says Borges. "They are there to provide that unbiased, impartial, independent, objective knowledge about the market and the particular characteristics of the property."

This means appraisers should not assess a dollar amount solely to make sure a real estate deal goes through, he says.

Appraisal management companies

Another major source of appraisal frustration within the real estate community has been the increased use of appraisal management companies (AMCs), says Grabel. Due to recent regulations, lenders and appraisers are not allowed to influence each other, he explains. AMCs have stepped in to fill the void, and now lenders who need an appraisal contact an AMC, which then assigns an appraiser for the property.

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