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January 24, 2012
The text below is taken from a one-page handout from the Appraisal Institute responding to the claim that so-called “low” appraisals are allegedly “killing” home sales.
Many in the real estate industry have tried to blame the market’s distressed condition on appraisers, saying that appraisers are at fault for producing opinions of value that don’t match a home’s listing or contract price, delaying a recovery in the housing market. In fact, appraisers are undertaking the same thorough research and thoughtful analysis that they always have in order to continue producing reliable, credible opinions of value.
Appraisals aren’t intended to confirm a home’s sales price.
Appraisals completed for mortgage transactions are used to assist lenders in making lending decisions. Buyers and sellers often have emotional value attached to a home or are unaware of the market. They shouldn’t assume an appraisal is somehow “wrong” if it doesn’t match the listing or contract price. There’s no reason to assume the contract price is the “correct” price simply because it’s higher than the appraisal.
Appraisers don’t set the real estate market; they reflect
what’s happening in the market.
Think of the appraiser as a mirror, reflecting the market – and the market is depressed as home prices have fallen far below values of a few years ago. Reliable, credible opinions of value help stabilize real estate loans and investments, promoting socially desirable real estate development.
For the full copy of the handout, click here.
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By: Present Value
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