Foreclosures hurting appraisals, killing deals

by WOHe

January 4, 2010 – Approximately 25 percent of real estate practitioners say low appraisals have broken up deals, according to the National Association of Realtors.

While foreclosed properties typically are not included in a comparable sales analysis, they account for about 40 percent of home sales — more than 50 percent in some markets — making it difficult for appraisers to value properties not in the foreclosure process.

Additionally, new industry rules that require mortgage lenders to order appraisals through in-house staff or appraisal management companies means more appraisers without knowledge of the local market are making valuations.

While says non-foreclosures are selling for upwards of 30 percent more than foreclosures, a study of 20 years of home sales in Massachusetts by Harvard University’s Joint Center for Housing Studies indicates that dwellings closer than 100 yards to a foreclosure lose about 1 percent in value.

The article originally was posted here.

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