Mortgage Crisis Changes Are Transforming Home Sales

ScottR · Chief Bottle Washer Joined: Feb 11, 2006 Posts: 332

According to the National Association of REALTORS® (NAR), 16 percent of its members had sales contracts canceled back in June -- an increase from 4 percent the previous month. NAR chief economist Lawrence Yun attributed the cancellations to tight credit and low appraisals. The trend has hit Wisconsin. Randy Borman, team leader for the Janesville, Milton, and Evansville offices of Century 21 Affiliated, observes, "Appraisers are definitely taking a more conservative approach, deciding to error on the side of conservatism. We've seen some deals blow up, but we’ve had many more that require some renegotiation where either the buyer comes down on their price or the buyer and seller agree to split the difference." In the current economic climate, it is rare for an appraisal to be at or above the agreed-upon sales price. This, in turn, has frustrated sellers, buyers, and REALTORS® alike when putting together what they think are solid deals. However, the mortgage lender has emerged as the most significant player in home transactions as he or she must make loans that make sense when compared to each home's value. Borman remarks, "It used to be that the most difficult thing was getting the buyer and seller together. Now, it's equally or more difficult to go from the acceptance of offer to the closing, and appraisals are certainly a part of that."