Faulty home appraisals 'snowballing,' National Association of Realtors says - Baltimore Business Journal:

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Even as prices begihn to stabilize andbuyers re-enter the market, the appraisals many banksw rely on to approve financinf are causing some deals to fall aparg at the last minute, or forcingh sellers to agree to lower prices. chief economist Lawrence Yun said the appraisal problemnis serious. “Lenders are using appraisersz who might not be familiar witha neighborhood, or who comparee traditional homes with distressed and discountexd sales,” he said. “In the past stories of appraisal problems have been snowballinh from across the country with many contractds falling through at thelast moment.” Washington, D.C. real estate agent Jeffreyg Tanck agreed.
Tanck, with the Czubaa Group at , said bad appraisals have affected two of his dealzs in the lastthree months. “In one a $364,000 condo came in $80,000 less than That buyer was usingan out-of-town lenderd who had no concept of this market,” Tancki said. “Another appraisal on a $317,000 co-op came in $27,00p0 under, forcing the buyer and selledr tomeet halfway.” The potentiapl problem inaccurate valuations pose to sales can be seen in numbers that measure pending sales of existing Those represent contracts that are signed, but salex that haven’t closed, and are usually considered a more forward-lookingy gauge of housing sales.
Earlier this the Realtors group reported pendingh home sales in April were up for the thirdstraight month, advancing 6.7 percent from March, with pendingy sales up more than 3 perceng from a year ago. By contrast, closef sales of existing homes in May wereup 2.4 percengt and remained nearly 4 percent below year ago levels. The NAR’s Yun said sees a dangere of a delayed housing market recovery and a furthet rise inforeclosures “ifg appraisal problems are not quickly Tanck said part of the problem is too much work and too few which he said are in demanr right now. “People are buying, and lendersd and appraisers areboth busy,” he said.
“Buft lenders should make sure they’re using appraisersw with the correctmarket knowledge.” many indicators continue to point to stabilization in The May increase in existing home salesw was the first back-to-back increase since September 2005. A separate report Tuesday from the showed declines inprices moderating, with the averagwe U.S. home price down just 0.1 percen from March to April.