November 2012

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THE LATEST SERVICING complete a scope of work that is not justified by the fee being offered." NAR further added some ap- praisers have to use eight to 10 comparable sales when previous- ly, three comparable homes were sufficient and the norm. When using a high number of comps, discounted, distressed homes end up in the equation. NAR explained this can lead to traditional homes in good condi- tion being compared to distressed homes without appropriate adjustments. However, with the distressed market share decreasing, the impact of distressed inventory on appraisals should also subside. According to NAR, distressed Distressed Sales Leading to Inaccurate Appraisals A recent survey from NAR indicates that appraisers are facing new issues in the current marketplace. I Association of Realtors (NAR) survey related to home apprais- als over the past three months, 11 percent of Realtors said a contract was cancelled because a home was appraised at a value below the negotiated price. Another 9 percent said a con- tract was delayed, and 15 percent ued appraisals are viewed as a reason for a stalled recovery. In a September National 48 | THE M REPORT nflated appraisals were identified as one of the causes of the housing bubble, and now underval- said a contract was renegotiated to a lower sale price. A much larger majority, 65 per- cent, reported no contract problems stemming from home appraisals. One reason for the low values, adjustments for market conditions or the condition of the property," the group stated in a release. Compared with traditional according to the NAR, is because some appraisers are not tak- ing into account the difference between distressed and non- distressed homes when making comparisons. "Some appraisers are using foreclosures, short sales, and rundown properties as compa- rable homes and are not making sales, a foreclosure sells for a 20 percent discount on average and a short sale for a 15 percent discount. NAR acknowledged issues appraisers deal with, noting "ap- praisers have faced undue pres- sure—whether from a lender or an AMC—to complete appraisals using distressed sales as comps, to complete an appraisal in an unac- ceptably short time frame, and to sales accounted for about one- third of all sales in 2011, and by 2013, the association expects to see the share of distressed sales fall to 10 to 15 percent. Even if the issue of distressed is that all appraisals should be done by licensed or certified professionals with local expertise, which also is what Fannie Mae and Freddie Mac recommend, but clearly this isn't practiced univer- sally," he said. "In the meantime, buyers, sell- ker-owner of Veissi & Associates Inc., in Miami, explained NAR's position on the issue. "Our long-standing policy ers, and real estate agents need to be aware that there are problems with some real estate appraisals, but also be aware of their rights to communicate with appraisers and lenders about errors or con- cerns with individual valuations," he added. "In some cases, a sec- ond appraisal may be justified." properties starts diminishing, there are still other issues in the appraisal industry NAR ad- dressed, including out-of-town appraisers who are not familiar with the area or local market conditions, slow turnaround times, and inconsistencies and fluctuations in appraised values. NAR President Moe Veissi, bro- SECONDARY MARKET ANALYTICS SERVICING ORIGINATION

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