Appraisal Crisis
By Jim Palmer Jr.

It has taken a very long time for sellers to finally have the edge in the local real estate market!  They are in fact, now enjoying a feeding frenzy like we have never seen before in any time of the past and that glut is making some sellers a bit cavalier and even cocky about how they approach pricing and negotiations, but these good times for sellers don’t come without some negative consequences.

Most residential property sellers receive multiple offers and bidding wars quickly ensue just because of the severe lack of inventory.  In the recent past, I have written of the problem appraisers are having in finding sold comparables that can justify the values of this rising market.  As difficult as that problem has become, another problem is fast compounding that crisis and slowing the market even more.

In a recent case a home sale was supposed to be nearing the end of its escrow period and was just a few days from the scheduled closing date.  Even though the appraisal had been ordered weeks before, no appraiser had picked it up yet and everyone associated with the transaction was in panic mode.  An appraiser finally picked up the job, but only after doubling the normal appraisal fee and stating that it would be 45 more days before they could have it ready for underwriter review.

The seller in this case was well aware that starting completely over with a new buyer would likely cause them at least another 45 days unless it was a cash buyer, so they reluctantly agreed to hang in there and wait it out.  The buyer who was foaming at the bit because they desperately needed a place to live begged for early possession without success and then had to scramble to make other living arrangements until this new home could close.

Appraisers have become somewhat spoiled in this market because they are inclined (like some Realtors®) to cherry pick easy transactions and avoid the more difficult appraisals.  I suppose that is a fair trade for the bad rap and heat they take when they can’t justify an inflated value to a lender, but it is creating even longer closing time frames.  This appraisal crisis is stretching the patience (to the breaking point) of many who have already waited a long time to finally close a transaction and move into a home.