Low Appraisal Valuations Wrecking Havoc on Columbia SC Home Sales

Columbia SC home sales are being stymied somewhat by low appraisal valuations, and this is the case just about everywhere in the country, not just in the Columbia SC area.

According to the results of a survey just released by the National Association of REALTORS® (NAR), “A sizable share of real estate appraisals are holding back home sales.” NAR says “most appraisers are competent” but that the process is the issue, that appraisals generally lag market conditions and changes in the appraisal process including using out of town appraisers, are the culprit.

NAR surveyed it’s members on the topic and reports that 65 percent of them reported having no contract problems as a result of appraisal issues over the past 3 months, 11 percent said a low appraisal killed a deal, 9 percent said a low appraisal delayed a deal and 15 percent said a low appraisal caused a contract to be renegotiated to a lower price. NAR says Major problems reported by Realtors® include:

• Some appraisers are using foreclosures, short sales and run-down properties as comparable homes, and are not making adjustments for market conditions or the condition of the property.
• Appraised values that do not reflect market conditions such as rising prices, the presence of multi-bidding and low inventory.
• Appraised values are very inconsistent and fluctuate widely.
• Out-of-town appraisers, who are not familiar with Columbia SC home sales or local market conditions, are being used.
• Turn-around time by both appraisers and banks is slow, which delays closings.

NAR went on to say they have been advocates for an independent appraisal process as well as increased education requirements to allow appraisers to produce the most accurate reports possible. However, NAR reports that appraisers have faced undue pressure — whether from a lender or an AMC — to complete appraisals using distressed sales as comps, to complete an appraisal in an unacceptably short time frame, and to complete a scope of work that is not justified by the fee being offered.

If you happen to be one of the rare buyers trying to get a “green home” appraised… good luck. Most appraisers are not trained in green homes, and many lenders are kicking them back as well.

Columbia SC home sales continue to show that real estate is coming back. Let’s just hope low appraisal valuations don’t put the brakes on an already sensitive market.