Value is set by the market, not appraisers
A recent article on CNN Money, Home Appraisals No Longer Derailing Sales, has our heads spinning.
Consider this one more sign that the housing market is heating up: Appraisers are putting higher values on homes again, allowing for more deals to go through.
During the housing bust, sales were often derailed by low-ball appraisals that fell far shy of a home’s selling price.
The article is incorrect. An appraiser only reads the market base on historical data. Appraisers do not set the trend or values. Buyers and sellers do it, along with the supply, demand, available financing, and government rules on the industry as a whole.
Sometimes lenders or the government will loosen guidelines, then tighten them. This has a dramatic affect on potential buyers, new and seasoned. An appraiser only interprets the market based on past sales, which tells us about the market’s demand. We even look at current listings from the area to help determine the supply. Just like a Doctor, we sometimes have to tell you something you don’t want to hear. Remember, we are just the messenger.
The article also has some terrible advice for wanna-be Donald Trumps of the world:
Between 2008 and 2010, appraisals for more than a third of Seattle-based real estate agent Michael Ackerman’s sales came in below the selling price. So he had to get creative.
“I started pulling out the key boxes at the homes so the appraisers couldn’t get in,” said Ackerman. “They had to call me to let them see the home. I would bring a packet of comparables along and explain what I used to price the home.”
Deliberately pressuring an appraiser to come in at a certain value is not ethical. It’s one thing for a homeowner to mention what they are hoping for, but it’s entirely a different thing for a realtor to lock us out!
Like most businesses, we need to do plenty more than we used to in order to keep the doors open. If we had to wait at every house for a realtor to bring me keys… let’s just say we wouldn’t have much time to listen!