BizTimes.com: Appraisal problems are holding back housing recovery
The National Association of Realtors (NAR) reported that existing home sales rose 2.4% to a seasonally-adjusted annual rate of 4.77 million. Although it is positive to report such an increase in sales activity, the increase in sales is less than expected. One of the main reasons why sales didn’t meet expectations is due to poor appraisals which are delaying transactions.
Fannie Mae and Freddie Mac require lenders to hire independent, qualified appraisers to appraise properties for their loans. It used to be regular business practice for lenders to hire appraisers based on prior work history and based on familiarity of the real estate market. Now, Fannie Mae and Freddie Mac will no longer purchase loans unless the appraisers are not ordered by the lender. Lawrence Yun, NAR chief economist, said, “Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales.” Yun is concerned that the housing market is at risk if appraisals continue to cause delays with real estate transactions or to cause deals from closing. These issues could increase the number of foreclosures which would only hurt housing values.
My Thoughts
Yun’s concerns regarding the new appraisal procedures are valid. Personally, I have not experienced the issues he describes. However, I have read a number of cases in publications and have heard a number of stories from colleagues which seem to indicate that the new appraisal policies are having an adverse affect on real estate transactions.
I am still optimistic that the housing market will continue to show signs of improvement during the next 2-3 months. Interest rates continue to remain at historically-low levels. Housing prices continue to remain affordable. First-time homebuyers are also encouraged to enter the housing market with incentives like the $8,000 tax credit.
If you are a first-time homebuyer, then I encourage you to consider entering the real estate market soon. In order to take advantage of the refundable tax credit, your real estate transaction must close no later than December 1. On average, most transactions close within 30-40 days of acceptance. Therefore, I recommend that you need to have an acceptable offer in writing no later than mid-October.
Let me repeat this. First-time homebuyers will need to have an offer accepted no later than mid-October to ensure that their deal closes by December 1. If you’re offer closes on December 2nd or later, you will miss out on the tax credit.
The writers of BizTimes.com describe the issues with the new Fannie Mae and Freddie Mac appraisal policies. Click here to find out how these policy changes will impact the real estate market>>>
-----
Labels: Finance
0 Comments:
Post a Comment
<< Home