</p

In addition, where three comparable homes were once the norm for mostrnappraisals, now some appraisers are required to provide as many as eight to 10.  This, NAR said, almost guarantees the use ofrndistressed properties as comps in many cases.</p

Appraisals also fail to reflect changing market conditions such asrnrising prices, a climate of multiple bids, or low inventories.  The turn-around time by both banks andrnappraisers is sometimes slow, which also delays closings and values arerninconsistent and fluctuate widely.  .</p

Another big concern according to NAR is that appraisers working for an AppraisalrnManagement Company (AMC) often operate under strict and limited parameters duernto bank lending criteria possibly arising out of banking regulations or thernleaders risk aversion.  The put backrnrisks imposed by Fannie Mae and Freddie Mac, which NAR termed “unreasonable”rncould also cause banks to set unrealistic requirements for appraisers.</p

Lawrence Yun, NAR’s chief economist, said none of this is new; there hasrnbeen a steady level of appraisal issues for quite some time.  “Though the real estate recovery is taking place,rnthe combined issues of stringent mortgage lending requirements and appraisalrnfrictions are hampering otherwise qualified buyers from purchasing a home in arntimely fashion, and in some cases are preventing them from buying at all,” hernsaid.</p

NAR said it has long advocated for an independent appraisal process andrnenhanced education requirements that allow appraisers to produce the mostrnaccurate reports possible.  However,rnappraisers have faced undue pressure, whether from a lender or an AMC, torncomplete appraisals using distressed sales as comps, to complete an appraisalrnin an unacceptably short time frame, and to complete a scope of work that isrnnot justified by the fee being offered.  </p

“In short, there has been an inconsistent appraisal process leading torndisruptive delays for home buyers and sellers,” NAR President Moe Veissi said.  “All home valuations should be made withoutrnundue pressure from any source.  Even so,rnbuyers, sellers and agents are free to ask appraisers to consider additionalrndata and to correct errors, or discuss unique aspects of the home, the neighborhoodrnor properties used as comps.”  </p

 The appraisal industry has made strides in adapting to market conditions,rnexpanding education and making appropriate adjustments for distressed homesrnthat are used as comps.  It appears manyrnof the remaining problems are tied to appraisals made through AMCs, NAR said.</p

 The level of distressed sales is trending down – they accounted for aboutrnone-third of all sales in 2011, but have averaged roughly a quarter of sales inrnrecent months.  By 2013 NAR expects the distressedrnmarket share to decline to about 10 to 15 percent.  As distressed inventory is cleared from thernmarket over the next two years, it should help to correct ongoing problems.</p

 “In the meantime, buyers, sellers and real estate agents need to be awarernthat there are problems with some real estate appraisals, but also be aware ofrntheir rights to communicate with appraisers and lenders about errors orrnconcerns with individual valuations,” Veissi said.  “In some cases, a second appraisal may bernjustified.”

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