NEW YORK (CNNMoney) -- You find the home of your dreams. You're pre-approved for a mortgage. You've scheduled the closing. Then ... the appraisal comes in too low and the deal blows up.
Even as some mortgage standards have eased, hitting a needed appraisal value is proving a frustrating blocker for buyers and sellers and those looking to refinance. If a buyer commits to a $200,000 home, but the appraisal comes in at just $180,000, the bank will finance only on the lower value -- and the buyer must come up with the difference.
Leslie Sellers, a real estate broker in Clinton, Tenn., has a client who recently went to contract on a Norris, Tenn., home. The appraisal came in 10% short.
"I explained to the appraiser that houses in Norris are older and sell for higher prices than other parts of the county," said Sellers, past president of the Appraisal Institute, a trade group. "[The appraiser] told me he was going with his value. We lost the sale."
The banks are one reason appraisals are coming in low. If they have to repossess a home, they don't want to get stuck with one worth far less than the mortgage.
"It's not like the lenders say, 'We want you to come in low,'" Sellers said. "It's more like, 'We want you to account for everything.' Some appraisers hear that and overcompensate."
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