Criticism subsides for appraisers
Not long ago, they were the punching bags of American real estate — accused of rank incompetence, wrecking home sales and failing to pick up on signs of the housing turnaround.
That was then. Today, appraisers are suddenly getting much more favorable reviews.
But wait: Have appraisals actually improved in accuracy in any measurable way during the past several years? Nobody really knows.
When the National Association of Realtors conducted polls sampling its million-plus members in the spring and summer of 2010, more than 40 percent of respondents reported having problems with appraisals.
Within the realty field, criticism of appraisers was rampant and scathing. Appraisers allegedly:
Used rock-bottompriced foreclosures and short sales as comparables for valuing houses where there was no financial distress. Those low appraisals blew up perfectly good sales or forced angry sellers to renegotiate with buyers.
Traveled long distances beyond their areas of geographic competence and inevitably were out of touch with local conditions.
Paid scant attention to evidence that home prices were on the increase, such as pending contracts, and numbers of properties that sold for above list price or experienced multiple bids.
Worst of all, critics charged, poorly trained appraisers who had flooded into the industry during the boom years now were getting the bulk of the valuation assignments from appraisal management companies — primarily because they would work for cut-rate fees.
In the latest monthly survey, the association’s pollsters found that just 24 percent of members reported significant issues with appraisal results — down significantly from a few years ago. What to make of this? Appraisers I interviewed agree on one key fact: The dramatic decrease in foreclosures and short sales during the past 18 months has cut the number of houses with depressed prices that appraisers can choose — or justify — as comparables for any given sale.
The bottom line for you as a seller or buyer: Although there are no guarantees that an appraiser will confirm the price on your sales contract, the odds are better this spring that your deal won’t fall apart because the appraiser came in with a low-ball valuation tied to distressed comps.
Kenneth R. Harney covers housing issues on Capitol Hill for the Washington Post Writers Group. You can write to him at P.O. Box 15281, Chevy Chase, MD 20815 or send email.