Revenge of the appraisers …

Worth-read article posted by RCP summarizing the history of residential appraisers … and the impact of attempts by the gov’t to regulate them.

Punch line:

Among the many guilty co-conspirators in the housing bubble were appraisers who succumbed to pressure from loan officers, buyers and real estate agents eager to get deals done. Wary of losing business, these appraisers submitted home valuations that were unrealistically high, contributing to an upward spiral of prices that was unsustainable.

Appraisers’ lack of independence brought calls for reform once the market melted down, including a spate of new federal regulations commencing in 2009, the latest in a long string of efforts by the government over the last half century to reform the business. Now, ironically, those new regulations are being blamed for some of the housing market’s current struggles, as exceptionally low home valuations kill deals, including those between highly qualified buyers and eager sellers.

Some real estate agents and lenders estimate low appraisals are killing from 20 to 40 percent of deals. Even allowing for a certain amount of exaggeration endemic to the real estate business, low valuations have become a significant problem in the market’s struggles.

Ken’s Take: I’ve heard some stories about low valuations killing deals … and low valuations working out to buyers’ advantage as sellers cut prices to conform to the valuations..

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