Home | Newsletter | Advertise
loading...

Are New Appraisal Rules Derailing Home Sales?

  • June 25th 2009

by Mark Wellborn

✉️ Want to forward this article? Click here.

Are New Appraisal Rules Derailing Home Sales?: Figure 1

Are property appraisals that are based on valuations from months ago derailing home sales that are on the verge of closing?

In her Local Address blog, Elizabeth Razzi writes that is exactly what is happening:

“There’s a Catch-22 that always arises when home prices start to increase near the end of a recession. Even though buyers are willing to pay more, appraisals often come in lower than the agreed-upon price because they’re based on comparable sales from three to six months earlier, when prices were bottoming. Real estate agents and mortgage brokers say it’s happening now, and that it’s disrupting sales.”

Razzi notes that one of the reasons that things may be worse than in years past is because of new rules from Fannie Mae and Freddie Mac that prevent brokers from ordering an appraisal directly from the appraiser. Instead, they have to go through the lender, who uses management companies to find individual appraisers who are often inexperienced and can make costly mistakes in the appraisal.

We have heard of at least two sales so far that have fallen through because of incorrect appraisals. We suspect there are more out there.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/are_new_appraisal_rules_derailing_home_sales/1071.

DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Start browsing below!

First-Timer Primers

Intro guides for first-time home buyers

Red Flags Revealed During a Home Inspection Top 5 Tax Breaks For Homeowners Tax Relief for DC Homeowners
Condo Fee Tutorial What is a Rent Back? 10 Ways To Tell If a Home Renovation is Well Done
Obtaining a Basic Business License For Your Rental What is an Adjustable Rate Mortgage? The Splitting the Rent Formula
How Much Cash Do You Need to Buy a House? Is This Condo Building Financially Healthy? Interest Rates and Mortgage Points
The Scoop on Mortgage Insurance

Unique Spaces

Awesome and unusual real estate from across the DC Metro

The Most Intriguing Loft in DC The R Street Firehouse DC’s One-Room House
Dupont Circle’s Old Frat House To Become Alley Home Best Transition From a Garage To a Home The Roundhouse
Tilden Gardens Restaurant-Turned-Home Hits Market Next Week Logan Circle’s Most Intriguing Garage Frank Lloyd Wright Goes Green in Kensington
Sears Bungalow Gets a Modern Makeover Old Town General Store Becomes Three-Level Home Making the Most of a Skinny House
A Studio 27 Renovation on Capitol Hill Once a Carriage House, Now a Home The Bank that Became a Home
From Pie to Hooch to Heroin to Home The Live-Aboards of Gangplank Marina A Treehouse with Rock Creek Park As A Backyard
Modern Tranquility in Sperryville Saddle Up For Stable Living Throwing a Curve at 550 Square Feet
A Modern Hilltop Retreat Tilden Street Restaurant Becomes Spacious Home Focus on Design: A Vastu Unit at 22 West
The DC Area’s First Net Zero Home A Yankee Goes Green DC’s First Carbon Neutral Home
Eco-Friendly Alley House Off H Street The Gym, The Stables and The Firehouse