The Appraisal Institute responds to Lawrence Yun of the National Association of Realtors after Yun points out issues home buyers and sellers are having across the crountry- homes just aren’t apprasising in situations where experts say they should.
Yun on Tuesday said, “The increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”
“Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”
To which AI Director, Bill Garber says:
“We take offense with the notion that the appraisal is only good if it happens to come in at the sales price. That mentality helped cause the mortgage meltdown to begin with. The fact that the appraisal does not match the sales price is not the fault of the appraisal but a fault of the market today.”
A tepid response on the surface, however, it seems to imply a level of culpability on bad appraisals leading up to the mortgage meltdown, is this the case?
Mr. Garber goes on to say:
In a typical real estate transaction [such as a buyer seeking a loan], our clients are the lenders. Appraisers provide lenders with information that protects them from making questionable loans and investments and helps them minimize risk. However, that should not suggest a bias toward lower valuation. Appraisers reflect the market, and sometimes, the markets don’t act like we want them to or hope they will.
In my opinion, these statements reek volumes, and almost make the case for reform. Could Mr. Yun be right?