Appraisals continue to be thorn in the side of home deals

Appraisals continue to hamper real estate transactions.

In the first six months of the year, one-third of real estate professionals say appraisals have caused a delay or canceling of contracts – that’s up from 29 percent for all of last year, according to the National Association of Realtors.

Lenders are requiring more detailed data thorough appraisals. Appraisers say the extra work requires them to pull more comparable sales – which sometimes may include foreclosures or short sales that sell at discounted prices.

Appraisers used to cite about three recently sold homes but now lenders require two to three times that, David Stevens, president of the Mortgage Bankers Association told SmartMoney.

When the appraisals come in lower than an accepted offer – which more frequently is what is occurring – the seller either has to lower the price or the buyer has to pay the difference.

From the three months ending September, 13 percent of real estate professionals say contracts were renegotiated to a lower sales price due to a low appraisal, according to NAR data.

Housing experts recommend that buyers add a statement in their contracts that says they’ll receive their initial down payment back if financing doesn’t come through the agreed price or the appraised value is below the offer in the contract, according to the SmartMoney article.