New Appraisal Law is delaying Purchase Closings
According to a recent new Law by the Federal Reserve Board, the appraisal market has been hit with lower fees and new appraisal rulings.
1.Appraisal Fees that the Banks are charged have been reduced from $400.00 to $200.00. Which means that the Quality Appraisers are leaving the market since they will not reduce their income by 50%.
2. If an appraisal comes in low by an appraiser the bank can only have 2 appraisals and they have to take the lower one.
The result is that thee banks do not have enough appraisers to process the current loans so we are being advised to Lenten our contingency times to 25 days since no closing are happening prior to 45 days and if you have a low appraisal from an inexperienced appraiser you must go and apply with a new bank to get a new appraisal.
Which since there are only 4 banks to choose from is really tying our hands.
I was around in the 1990's when the banks lost 100K's of dollars due to a refusal to take 5K less and sat until the market dropped 100K more. I asked the Banks don't your stock holders see these losses and they replied "no" we right all of this off in the red and they just declare it. They never see that the process of foreclosures is the cause of it.
Well, here we go again in 2009. Banks take 2-3 months to get back to our buyers who have the 1st offer. By then the buyer sees prices dropping or a better buy and walks from the short sale or foreclosure and here we go again.
I had such high hopes that the short sales were going to be the cure of the foreclosure problems of the 1990's but the banks are self destructing again. This is not out of ignorance but out of fear. They get so scared about the market that they over compensate to the point where they choke the life out of the real estate flow and stop the process almost to a halt.
Hopefully, someone in the banking industry will use the expertise of a experienced Realtor and get this market flowing again before they cause another major price drop.