Don't Blame the Appraiser

The Appraisal Institute, in a press release the Institute said, " Don't blame the real estate appraiser if it turns out that house you're trying to sell or buy isn't worth what you thought it was."

    

President Sara W. Stephens, MAI said that real estate agents, homebuilders and others have placed blame for the market's distressed condition on appraisers who produce opinions of value that don't match a home's listing, contract or sales price, delaying a recovery in the housing market and called that accusation "nonsense." She said,"The fact is that appraisers are undertaking the same thorough research and thoughtful analysis that they always have in order to continue producing reliable, credible opinions of value."

  

Stephens pointed out that buyers and sellers often have emotional value attached to a home or are unaware of the market. She also noted that appraisals completed for mortgage transactions are used to assist lenders, who are the clients, not buyers or sellers, in making lending decisions - and are not intended to confirm a listing, contract or sales price. There's no reason to assume the contract price is the "correct" price simply because it's higher than the appraisal.

    

The Institute also released two handouts.  The first explains the process of conducting an appraisal in a declining market and includes a discussion of how an appraiser discounts a distressed comp. The second handout attempts to explain what an appraisers job really is, making the points that:

• Appraisals aren't intended to confirm a home's sales price.
• Appraisers don't set the real estate market; they reflect what's happening in the market.
• Appraisers work not for buyers or sellers, but for lenders.
• Appraisers are independent, third-party experts with no motive to be biased.
• Appraisals sometimes are assigned to the least qualified, least competent appraisers, but especially in a distressed market, competent and qualified appraisers - such as designated members of the Appraisal Institute - should be hired for difficult assignments.
• Appraisers know how to use distressed sales as comparables

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