The housing market has picked up steam lately, but one of the side effects of the sudden improvement is that home appraisals often take longer than they used to, and often come in with a much lower value than what everyone expected. This is causing a number of house sales to collapse.
Appraisals are taking longer because there’s suddenly more demand for them, at the same time that far fewer people are working as appraisers than during the boom years. This is understandable, but the problem with a slow appraisal is that it can sometimes cause a purchaser to lose an interest-rate lock, which can be a big problem at a time when interest rates are rising.
The main reason that appraisals are coming in lower than expected is that prices have risen so quickly lately. If an appraiser values a property by using “comparable sales” from a year or even six months ago, those sales might not reflect the most recent changes in the market, and might result in a surprisingly low value. [Read more...]