A couple days back a blog reader wanted me to write a blog post on how today’s appraisals are hurting the real estate market. Well “great minds think a like” because the Wall Street Journal (pg A-3) has an article on this subject.
Today’s Wall Street Journal has an article entitled: “Appraisals Roil Real Estate Deal” A conservative approach to home pricing makes it harder to refianance or sell. The article is about how a wave of lower-than-expected home appraisals is adding another drag on a limping real estate recovery.
Appraisals are becoming one of the biggest obstacles for Americans trying to sell their homes, refinance their mortgages or tap into home-equity credit lines.
During the housing boom, appraisers often complained of pressure from lenders to inflate home-value estimates to justify dubious mortgage lending. Now, some people in the mortgage business — and some borrowers — say the pendulum has swung too far the other way.
Lenders burned by hiuge losses from defaults are now pressing appraisers to be more conservative. And appraising itself is more difficult with home prices fluctuating rapidly and transactions few and far between in some markets; sale prices from a few months back may no longer be reliably indicate the value of a nearby home.