Do Appraisers know best?

If you are an appraiser reading this just read the whole post before you react...

Appraisals have always been to me an interesting part of the real estate cycle. The job is to place a value on something (a piece of real property in our conversation) based on an organized set of rules and processes to obtain that value. In other words, they make a guess or state an opinion. I don't say that to devalue the profession but what if 2 appraisers value the same property and have different opinions of value - does that mean one of the guesses/opinions is wrong?

As a Realtor, I would suggest that the true value of a property is determined when 2 educated parties come to agreement on a value in an arms length transaction.

So why is this important to the public? If you are buying a house or commercial property, you may have done your due diligence. Each party may have employed a real estate professional but the appraiser doesn't appraise the value high enough for the mortgage company to fund the loan. NO DEAL without a mortgage.

We've established the best way to determine value (2 parties agree) and we know that 2 appraisers could come up with 2 different values on a property - why does an appraiser have the ability to save or kill a deal?

Independence! Once upon a time, some unscrupolous appraisers helped to artificially inflate prices and were complicit in mortgage fraud schemes (along with Realtors, title companies loan officers, etc.). As an industry we tried to avoid this again by making the appraisers independent - a good idea on the surface. But when does the pendelum swing too far? When Realtors & Loan Originators aren't even allowed to converse with the appraiser or suggest additional information that might change the value opinion.

Appraisers have a very difficult job to do and provide a much needed point of view on real estate deals. However, as an industry we need a feedback mechanism that ensures that they are dilligent and accountable. No single person or entity in the transaction should have the ability to approve or deny the deal - Well, except the buyers and sellers!!