July 28, 2009 – (RealEstateRama) — Low appraised home values due to foreclosure sales are hurting the housing market, especially the new home builders, according to the National Association of Home Builders, which says builders are reporting about 26% of sales fall through due to appraisals coming in below the contracted sales price.
“The current appraisal mess is a great example of those not in business trying to regulate the business process and managing to screw up the whole thing,” said John Strobeck of Bright Future Business Consultants. “The argument is strong that when you have agreement between a buyer and a seller on a price, that should be the value of the home.”
On July 10, Freddie Mac issued a Guide Bulletin stating it does not require appraisers to use lender-owned (or REO for real estate owned) property, foreclosures or short sales in selecting comparable sales to provide an accurate opinion on home values based on market data. The Freddie Mac guide further reported that appraisers must “certify that comparable sales chosen are those most similar to the subject property.”
“Home builders are increasingly concerned that inappropriate appraisal practices are needlessly driving down home values,” said Roger Yohem, vice president of the Southern Arizona Home Builders Association (SAHBA). “This, in turn, is slowing new home sales, causing more workers to lose their jobs and putting a drag on the economic recovery.”
SAHBA research has shown that every new home that’s built in the Tucson market equals 2½ full-time construction jobs for a year.
