It now seems that Columbia SC home appraisals are no longer killing sales as they were just last fall. Appraisers are putting higher values on homes again, allowing more deals to go through. During the housing bust, Columbia SC home sales were often derailed by low-ball appraisals that fell far shy of a home's selling price.
As home prices climb and housing inventories shrink, appraisers are valuing homes at or above their selling prices, according to Lawrence Yun, chief economist for the National Association of Realtors.
Columbia SC Home Appraisals No Longer Coming Up Short
This was not the case during the bust. For example, if a home cost $400,000 and required a 20% down payment of $80,000, the buyer would need to finance $320,000. But if the appraiser valued the home at $350,000, the buyer would only be eligible for a $280,000 loan — making the home too costly for some buyers.
Between 2008 and 2011, appraisals were consistently coming in lower than the selling price of a Columbia SC home. This is no longer the case today. We are seeing more and more Columbia SC home appraisals coming in above the selling price, which is just one more sign that the housing market is recovering.
Meanwhile, the pace of Columbia SC home prices continues to rise, and the inventory of available homes for sale continues to shrink. If this trend continues, we expect Columbia SC home appraisals to continue to come in higher than selling prices.
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.
Mortgage lenders all require Columbia SC home appraisals to determine the property’s value to make sure they are not lending you more money than the property is worth. Your lender orders the appraisal, and you are responsible for paying the fee. Costs can vary from $250.00 to $500.00. The property is the collateral for your mortgage so you can understand their concern that they will be able to get their money back if you default, and they have to foreclose and sell your home.
Lending guidelines have become stricter now because of the record number of foreclosures that have occurred the past few years making it harder to get loans even if you have good credit. An appraisal is just one assurance the lender has that they are making a low risk loan. They are also concerned about your credit and payment history.
What Exactly Is In Columbia SC Home Appraisals?
Columbia SC home appraisals contain the property dimensions, including the lot size and square footage of the home, the number of rooms, upgrades and amenities, the year built and the property location. The appraisal can be done one of two ways. First by using the sales comparison approach, or by using the cost approach.
The sales comparison approach is used for resale property by comparing at least three to five other similar properties that have recently sold and making adjustments up or down based upon the subject property’s size and features. The cost approach is used for new construction by calculating the replacement cost to rebuild the home if it were damaged or destroyed.
The appraised value is what your home is worth in today’s market. If the home does not appraise, you have a couple options. Put more money down, ask the seller for a price reduction, pay for a second appraisal or walk away from the transaction and find another home.
While you don’t get to choose the appraiser, you can make a request that the lender use a local appraiser. The reason a local appraiser is better is they are familiar with the area as opposed to an outside appraiser who doesn’t understand the quirks of your local market. There is no guarantee that the lender will grant your request, but it doesn’t hurt to ask.
It is important to understand the process for Columbia SC home appraisals and their importance when purchasing a home. While you don’t need to be an expert, you should have a general understanding. Your mortgage broker or lender will also be able to answer any questions you may have as well.
If you have any questions about anything having to do with Columbia SC home appraisals, we’d love to hear from you.
Columbia SC home appraisals are continuing to make it difficult or even impossible for some borrowers to buy a home or refinance the one they have.
Home buyers as well as real estate agents are being left frustrated at their inability to take advantage of the great market opportunities right now, with almost a third of real estate brokers admitting they have seen transactions fall through, renegotiated or delayed due to low Columbia SC home appraisals.
Part of the problem is that home prices have dropped further than many people would like to believe. Everyone thinks the value of their house hasn’t fallen nearly as much as every other house in their neighborhood, when foreclosures in the neighborhood are relevant to the current market price of everyone’s home, like it or not.
Changes in how Columbia SC home appraisals are done that were enacted in the wake of the financial crisis were designed to eliminate improper pressure on appraisers that often led to inflated valuations during the housing boom. But critics say those changes resulted in unnecessarily conservative valuations and the greater use of appraisers with little knowledge of local market conditions.
Finding Accurate Valuations Affecting Low Columbia SC Home Appraisals
Another problem that is further complicating Columbia SC home appraisals is, accurate valuations are difficult to find when sales are thin and prices are just beginning to edge upward after prolonged declines. Many borrowers are in a holding pattern for extended periods because it’s difficult to find comparable sales to support the appraisal value.
To help with your odds of being negatively affected by low Columbia SC home appraisals, you’re advised to look at comparable sales from the last three to six months before even looking for a mortgage, whether it’s buying a home, or refinancing the one you have.
As a borrower, you can’t control who the lender hires to do the appraisal, but you can accompany the appraiser during their inspection. This might be to point out any improvements that may add to the home’s value, including providing a list of improvements that might not be obvious. It also could help if you are able to provide the appraiser with comparable sales that can be used to support the valuation of your property.
If lowball Columbia SC home appraisals are affecting your ability to get financing, talk to us. There may be options available without just giving up hope.