Appraisers are delaying recovery of the housing market with unrealistically low appraisals that scuttle deals, chiefs of the National Association of Realtors and National Association of Home Builders claim.

The problem is appraisers use sales of foreclosures, short sales and other distressed sales to set values for non-distressed sales, they say. But those distressed sales are usually in much worse condition and sell at much lower prices. Sales are falling through, sometimes at the last minute, because of the faulty appraisals.

“We need realistic appraisals that are based on proper comparisons and done by a local specialist,” said National Realtors’ group President Charles McMillan, a broker in Dallas.

“This practice must be corrected because it contributes to the continuing downward spiral in home prices, forestalling the economic recovery,” said National Home Builders’ group Chairman Joe Robson.

Appraisers typically only do exterior inspections because they are usually unable to enter homes, Robson said.

But foreclosures often have deferred maintenance or internal damage not visible in an external inspection.

“We take offense with the notion that the appraisal is only good if it happens to come in at the sales price,” said Bill Garber, a director for the Appraisal Institute, which represents appraisers.

“That mentality helped cause the mortgage meltdown to begin with. The fact that the appraisal does not match the sales price is not the fault of the appraisal but a fault of the market today.”