Economic NewsHome ownershipReal Estate News April 30, 2013

Appraisals Are Challenging in an Appreciating Market

by The KCM Crew on October 18, 2012







The real estate market is recovering with prices in most regions of the country showing assorted levels of appreciation. In a market where prices are escalating, the appraiser may find it difficult to find appropriate ‘comps’ for your listing. That can cause challenges during your real estate transactions as appraised values may not reflect market conditions such as rising prices, multiple bids, and low inventory.

In a recent survey conducted by the National Association of Realtors (NAR), it was revealed that:

  • 11% of Realtors said a contract was cancelled because an appraised value came in below the price negotiated between the buyer and seller
  • 9% reported a contract was delayed
  • 15% said a contract was renegotiated to a lower sales price as a result of a low valuation

Discuss this situation with both buyers and sellers right from the beginning. By managing expectations early, it will enable you to better handle the challenge should it arise.