Real Estate News
In the volatile real-estate market of the past several years, prospective homebuyers and refinancers have encountered the same frustrating obstacle: a low appraisal.
Appraisal complaints have risen in recent years, particularly since home values began plummeting in 2007 and the Home Valuation Code of Conduct took effect in May 2009. But the experts say this isn’t the first real-estate cycle in which contract prices don’t often match an appraised value. (Bing: When was the Home Valuation Code of Conduct eliminated?)
“Everyone needs to understand that real-estate appraisers report the market; we don’t make the market,” says Sara Stephens, president of The Appraisal Institute and principal of Richard A. Stephens and Associates in Little Rock, Ark. “We gather information, analyze it and make a report.”
Why appraisals can come in low
A low appraisal is not necessarily wrong, but it does create a situation in which a lender may not approve the loan. Simply stated, appraisers compare the value of a home with the comparable properties, or “comps,” in the surrounding area.