Here's another factor working against the housing market recovery : appraisals. Real-estate professionals say that the results of home appraisals are increasingly stalling or preventing sales.
Fewer than 10 percent of realtors blamed appraisals for killing or delaying a deal prior to 2009, according to the National Association of Realtors. But in 2010, 29 percent of them said it was the cause and through September of this year, a third of them said so.
The culprit seems to be a combination of more thorough appraisals required by lenders to determine a home's value and a housing market that makes it difficult to find homes that are comparable. When the market was more stable, appraisers could compare values with as few as three homes in the area, but now lenders are requiring many more comparisons, which appraisers say makes it harder to find similar properties to compare.
The appraisal is important for buyers because mortgages are typically offered for an amount up to 80 percent of the appraised value of the home. A lower appraisal means a smaller mortgage. For sellers, the appraisal could delay the sale and send them back to the negotiating table if their price is above the appraised value. Often, the buyers and sellers will meet in the middle when it comes to the difference between the selling price and the appraised value in order to get the deal done.
What has been your experience with appraisals?
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