Faulty home appraisals 'snowballing' - Boston Business Journal:

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Even as prices begin to stabilized andbuyers re-enter the market, the appraisalse many banks rely on to approvd financing are causing some deals to fall apart at the last or forcing sellers to agree to lowed prices. chief economist Lawrence Yun said the appraisaol problemis serious. “Lenders are using appraiserws who might not be familiar with a or who compare traditional homes with distressed anddiscountede sales,” he said. “In the past month, storied of appraisal problems have been snowballin g from across the country with many contracts fallin g through at thelast moment.
” The potentia l problem inaccurate valuations pose to sales can be seen in number that measure pending sales of existing Those represent contracts that are signed, but salews that haven’t closed, and are usually considered a more forward-lookingv gauge of housing sales. Earlier this the Realtors group reported pending home salea in April were up for the thirdfstraight month, advancing 6.7 percent from March, with pendinv sales up more than 3 percent from a year ago. By closed sales of existing homes in May wereup 2.
4 percen and remained nearly 4 percent below year ago The NAR’s Yun said sees a danger of a delayed housinvg market recovery and a further rise in foreclosured “if appraisal problems are not quicklyu corrected.” Still, many indicators continue to point to stabilization in housing. The May increase in existing home sales was thefirst back-to-back increass since September 2005. A separates report Tuesday from the showef declines inprices moderating, with the average U.S. home priced down just 0.1 percent from March to April.