By the skin of my teeth, I just closed a deal where the bank appraisal was a full $200,000 LESS than the offer price....needless to say, both my buyer and the seller completely flipped out, and wanted to know exactly how the appraiser came up with such a low value.
So after an hour-long phone call with the appraiser (which he thankfully granted), here's what I learned:
Short-term sacrifice for Long Term gain
The whole Appraisal Industry is currently in the cross hairs of Federal reform, and though it will be tough for everyone involved (Appraisers most of all), it will ultimately help stabilize the entire Real Estate Market.
Appraisers, especially Bank appraisers, used to make their living completely off the relationships they fostered with Lenders, Mortgage Brokers, & Agents, but not any more.....these relationships during the boom years helped to invisibly raise homevalues skyward on many appraisals, which raised just as many eyebrows towards these same appraisers as soon as homevalues tumbled.
Unfortunately, one of these eyebrows belonged to the Associated Press, who conducted a investigative report that inspired 4 national associations of Real Estate Appraisers to petition Congress for tougher oversight & enforcement over the entire Appraisal Industry (read about it here).
Basically, the Appraisal Industry has called for tougher regulations against itself!
Which strikes me as INCREDIBLY Brave....I really do respect these appraisers for what they are doing, because they are literally sacrificing their own business to bring integrity back to the marketplace and back to their profession. They know that they are literally the LAST WORD on home values, and even though they don't make much for such an important job, they are willing to risk it all in the name of progress.
So long story short, the appraiser didn't budge on the value, but I HIGHLY respected him for it, and ultimately the deal closed anyway......no real harm done.
Moral of the story: The next time an appraisal value disappoints you, be sure to inform your clients of the intense pressure that appraisers are currently under to help stabilize the market for all of us.....it sure helped save my deal, and hopefully it may help save yours too.
-Peter H.
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