Sometimes appraisals come out lower than the agreed selling price. It is easy to label the appraiser as conservative or not competent when this occurs, but there are some justifiable reasons these transactions end up the way they do.
When the appraisal conclusion is lower than the sales price, the transaction may be in jeopardy. Remember the appraiser's job is not to reach a value that is desired or even needed for a transaction or loan to be completed.
The appraiser's job is to be objective, impartial and unbiased. Realistically the appraisal should be well supported within the market. "Value" is defined as the monetary relationship between properties and those who buy, sell, or use those properties. Value expresses an economic concept. So it is never a fact but always an opinion of the worth of a property at a given time.
I know many Realtors do not like it when appraisals do not come out as they expected. Appraisers are simply doing their job of being impartial.
As an Appraiser I have done a few appraisals that ended up lower than the purchase price. As many of the realtors involved were upset, the transaction still took place, just at a lower price. From my point of view it if the list price is reasonable for the market the property sells faster and with little to no issues in the opinion of value from the appraiser.
What is your point of view on this subject?
