Today’s must-read: John Oldham on home values
Alameda’s incomparable real estate blogger, John Oldham, just dropped this post about a new change in appraisal rules that could make it more difficult for folks to sell their homes.
Oldham is saying that a new industry code of conflict prohibits real estate agents and lenders from selecting appraisers (intended to avoid folks colluding to drive up home values). But what’s happened is that folks from outside the area – who don’t have direct knowledge of local markets – are coming in to appraise homes in their stead, and since their estimates are on the conservative side, sales could end up getting killed.
Real estate agents and mortgage brokers say the pool of out-of-area appraisers has led to an increase in questionable or low valuations by appraisers who are leery of producing estimates that are too high. Those appraisers from outside the housing market and unfamiliar with the nuances of neighborhoods to which they’re sent are being very Conservative.
National Association of Realtors chief economist Lawrence Yun said the appraisal problem is serious. “Lenders are using appraisers who might 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.”
That said, Oldham reports that June was a good month for home sales, with year-over-year numbers flat (as opposed to declining) but prices slightly down.