With record-low interest rates potential home buyers are seeking to buy and current homeowners are seeking to refinance. But low appraisals are making it difficult or even impossible for some borrowers to take advantage of this boon in record-low interest rates.
The problem stems from the fact that home prices have plummeted even further than first anticipated, as wells as laws and rules enacted by legislators and lenders in the wake of the financial crisis which seek to eliminate inflated appraisal valuations and improper pressures on appraisers as seen in the housing boom have now resulted in an “over-correction” or unnecessarily conservative valuations.
Also, accurate valuation for appraisals may be hard to come by when sales in the real estate market have been so anemic.
There are steps, however, that you can take for a purchase or refinance transaction in order to increase the odds that your mortgage is approved and your deal gets done.
• Know what the range of value is for your area by looking at comparable sales from the last three to six months;
• Accompany the appraiser during the inspection, pointing out features and improvements that add to the home's value;
• Although chances are slim, request that the lender review the appraisal findings, especially if you think the appraisal
is unusually low, contains factual errors, such as the number of bathrooms and so forth, or you have more recent
comparable sales that were not available at the time the appraisal was initially done and submitted; and
• Start over with a new lender if your original financing falls through.
For more information on this topic, see Wall Street Journal article entitled, Fighting Back Against Lowball Home Appraisals.