ST. LOUIS PARK, Minn. - For real estate agent John Powell, finding a buyer for his new listing in St. Louis Park may not be the hardest part of his job.

Getting the appraisal to match the purchase price is becoming his biggest struggle.

"These appraisers, a lot of them, are coming in lower or substantially lower," says Powell.

For Powell, low appraisals have held up three sales in the last two months.

One client is Michael Sinna. He found a great home in Forest Lake with almost 3,000 square feet on a wooded acre of land.

Sinna and the seller agreed to a purchase price of $274,800 but the appraisal came back at $240,000.

"My wife was just in shock and so was I," says Sinna.

That $35,000 difference is what the bank wasn't going to cover in the loan.

"The gap was so huge we thought there is no way the seller is going to work with us," says Sinna.

Lucky for him, the seller agreed to meet halfway, dropping the price as long as Sinna came up with an extra $19,000 in cash.

It's a frustrating trend for all parties involved and a trend Powell believes is keeping prices low and stunting a housing recovery.

"A market is driven by what buyers are willing to pay for a home," says Powell. "For that appreciation to take place, we're going to need to see values come in at these higher price points. Without that we're in trouble."

"For that appreciation to take place, we're going to need to see values come in at these higher price points. Without that we're in trouble."

Forsythe Appraisals in St. Paul gave some possible reasons for low appraisals:

• A rapidly changing local market. Housing is hot now but comps appraisers have to use can go back a full year when prices weren't as strong.

• Foreclosures and short sales can drive down prices.

• Banks are scrutinizing appraisals closer than ever, often causing the people doing the appraising to be more conservative.

 

"For that appreciation to take place, we're going to need to see values come in at these higher price points. Without that we're in trouble."

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