Scores of home sales in central Indiana are seeing prices rise so fast that appraisers are having a hard time finding comparables that can match the negotiated selling price.
Low appraisals traditionally are most common in a declining housing market, when a lack of recent comparable home sales make it difficult for appraisers to determine the current market value. But the opposite is occurring now, in central Indiana and in some other parts of the country, the Indianapolis Business Journal reported.
A low inventory of homes for sale is driving up prices to the point that many sellers are fielding multiple offers, some for even more than the list price, making it harder for appraisers to determine a fair market value.
“I have two properties I’m waiting on appraisals for and, I’ll be honest, I’m very nervous about them,” F.C. Tucker Real Estate Agent Dani Robinson told the Indianapolis Business Journal.
Robinson, an agent for three years, has represented five sellers in the past two months who got received appraisals below the sales price.
“It’s kind of crazy,” she said.
In the 13-county central Indiana market, the average sale price through May was up 1.7 percent from the same time last year, to $180,202, according to F.C. Tucker Co. Appraisers typically need at least three sales of comparable homes, ideally within the past six months, on which to base an appraisal. They then make adjustments for property differences.