Appraisal Challenges with Current Housing Market

For someone who grew up building and fixing cars, homes, and everything else he could get his hands on, it’s probably not a surprise that Phoenix appraiser Steve Leavitt enjoys his work as a property appraiser. He has been in business for over 25 years now.

This past year, with the US housing market on the rise and home sales reaching the highest level in 15 years, appraisers have been facing new challenges. Homes sold at a record pace, with sellers often fielding multiple competing bids and all-cash offers. Even homes that were disgusting or burned out sold quickly, and at amounts that were well over the asking price, according to cnn.com.

Leavitt discusses recent hurdles appraisers are facing with the current housing market.

 

Question

What’s the biggest pain point appraisers are currently facing?

Steve

Appraisers are facing increased pressure to get appraisals back to lenders with much quicker turn times requested due to the large increase in home sales, especially in the Phoenix area we are in. Appraisers need to be accurate, and rushing the process doesn’t benefit anyone involved. This means as appraisers, we have had to add many hours to the work week or turn down business.

Another pain point is appraisal waivers. Because appraisal waivers are being allowed for about 50% of homes, the homes that do need appraisals and the work we are seeing are for more complicated home appraisals.

 

Question

How is today’s tight purchase market affecting the appraisal process?

Steve

The tight purchase market means fewer available comparable home listings on market for appraisers to use in their reports. Multiple comparable home sales are required for appraisals, making this part of the process more difficult.

In addition, appraisers are needing to spend additional time on more extensive research and data for market appreciation adjustments and time adjustments.

 

Question

What is your number 1 tip for homeowners to avoid appraisal problems in this crazy 2022 market?

Steve

My best advice is to provide the appraiser with a list with costs of any updates done to the home in the 3 to 5 years prior to appraisal. Include anything you find important. It may/may not be important to the appraiser, but it’s best to list everything.

The second tip I would give homeowners isn’t new advice for this market, but still very important - be sure your home is in good repair so the appraiser doesn’t come back with work orders.

 

Question

Do you see changes on the horizon for home appraisals?

Steve

Changes are already here. I believe bifurcated appraisals - also known as desktop appraisals or hybrid appraisals - will become more common. Currently Fannie May and Freddie Mac are accepting these appraisals during a trial period, and they don’t require the appraiser to ever step foot on the subject property. Data and information can be gathered from existing sources such as past appraisal reports for the property, or the MLS and public record data.

Another change coming for home appraisals is an increase in the cost. Because appraisal waivers are being issued for the lower cost, standard home appraisal, appraisers are taking on bigger jobs and more complicated appraisals - which means higher fees.

 

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