Faulty home appraisals 'snowballing' - Denver Business Journal:

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Even as prices beginn to stabilize andbuyers re-enter the market, the appraisalxs many banks rely on to approv e financing are causing some dealsz to fall apart at the last minute, or forcinv sellers to agree to lower prices. chief economist Lawrencse Yun said the appraisal problemis “Lenders are using appraisers who might not be familiar with a or who compare traditional homes with distressesd and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country with many contractsw falling through at thelast moment.” D.C., real estate agent Jeffrey Tancko agrees.
Tanck, with the Czubas Group at McEnearney Associates, said bad appraisals have affected two of his dealsz in the lastthree months. “In one case, a $364,000 condo came in $80,00o0 less than asking. That buyer was using an out of town lender who had no concepg ofthis market,” Tanck said. “Anotherr appraisal on a $317,000 coop came in $27,0009 under, forcing the buyer and sellefr tomeet halfway.” The potential problem inaccurate valuations pose to sales can be seen in numberws that measure pending sales of existingb homes.
Those represent contracts thatare signed, but sales that haven’t closed, and are usually considered a more forward-lookinh gauge of housing sales. Earlier this month, the Realtorx group reported pending home sales in April were up for the thirdsstraight month, advancing 6.7 percent from with pending sales up more than 3 percent from a year ago. By closed sales of existing homes in May wereup 2.4 perceng and remained nearly 4 percent below year ago levels. The NAR’xs Yun said sees a danger of a delayed housingt market recovery and a further rise inforeclosures “if appraisal problema are not quickly corrected.
” Tancm said part of the proble m is too much work and too few which he said are in demand rightg now. “People are buying, and lenders and appraiser s areboth busy,” he said. “But lenders should make sure they’re usin appraisers with the correctmarket knowledge.” many indicators continue to point to stabilization in housing. was the firs back-to-back increase since September 2005. A separate reportf Tuesday from the Federal Housing Finance Agency showed decliness inprices moderating, with the average U.S. home price down just 0.1 percent from March to ( .
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