Appraisers say "Don't Blame the Messenger" for Low Home Prices
ThernAppraisal Institute has apparently had enough and has decided to fight backrnagainst what it perceives as unwarranted blame for depressed home prices. In a press release the Institute says, ” Don’t blame the real estate appraiser if it turns out thatrnhouse you’re trying to sell or buy isn’t worth what you thought it was.”</p
Speaking for the Institute, itsrnpresident Sara W. Stephens, MAI said that real estate agents, homebuilders andrnothers have placed blame for the market’s distressed condition on appraisersrnwho produce opinions of value that don’t match a home’s listing, contract orrnsales price, delaying a recovery in the housing market and called thatrnaccusation “nonsense.”</p
“The fact is that appraisers arernundertaking the same thorough research and thoughtful analysis that they alwaysrnhave in order to continue producing reliable, credible opinions of value,”rnStephens said. “Don’t shoot the messenger.”</p
It is unclear why the Instituterndecided to refute the claims about appraisers at this time. We did a search and found a number ofrnarticles with the blame appraisers theme, but none that were more recent thanrnlast summer except for charges from the National Association of Realtors that lowrnappraisals are among the reasons for recent high levels of sales contractrncancellations. NAR, however, has been complainingrnabout low appraisals since at least the spring of 2009. </p
Noting that buyers and sellers oftenrnhave emotional value attached to a home or are unaware of the market, Stephensrnpointed out that appraisals completed for mortgage transactions are used tornassist lenders, who are the clients, not buyers or sellers, in making lendingrndecisions – and are not intended to confirm a listing, contract or sales price.rnThere’s no reason to assume the contract price is the “correct” price simplyrnbecause it’s higher than the appraisal, she said.</p
As to the claim that appraisers arernusing distressed sales as comps for market rate properties, Stevens said thatrnqualified appraisers know how to handle adjustments for distressed propertiesrnand added that in some markets, distressed sales are so prevalent that it wouldrnbe improper not to use them as comparables.</p
The Institute also released twornhandouts. The first explains the processrnof conducting an appraisal in a declining market and includes a discussion ofrnhow an appraiser discounts a distressed comp. The second handout attempts tornexplain what an appraisers job really is, making the points that:</p<ul class="unIndentedList"<liAppraisals aren't intended to confirm a home's salesrnprice. </li<liAppraisers don't set the real estate market; theyrnreflect what's happening in the market. </li<liAppraisers work not for buyers or sellers, but forrnlenders. </li<liAppraisers are independent, third-party experts withrnno motive to be biased. </li<liAppraisals sometimes are assigned to the leastrnqualified, least competent appraisers, but especially in a distressed market,rncompetent and qualified appraisers – such as designated members of thernAppraisal Institute – should be hired for difficult assignments. </li<liAppraisers know how to use distressed sales asrncomparables. </li
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