That Stupid Appraiser Came In Low and Killed My Deal!
I'm not going to lie. When I hear that phrase, I have to stop, take a deep breath, and count to ten. It's like nails on a chalkboard to anyone with true understanding and knowledge of how these things really work. It is one of the most ignorant, overused, uninformed phrases that has become a rampant staple of rants on real estate social media, Realtor websites, YouTube videos by disgruntled parties, and many headlines.
I have just completed some market research that I thought would be a wonderful tool in illustrating how and why that nonsense is nothing but harmful and slanderous in multiple ways.
I received an appraisal order and began some market research. There were lots of great online photos of the full interior and exterior of the property. The development it resides in is of homes that are all very similar. The research yielded 49 comparable properties in the same development that is the subject of the property to be appraised. Now let me start by saying that using the term comparables, we as appraisers do not mean any random sales. When an appraiser says something is a comparable, that basically means it is of similar style, design, and/or appeal, etc. to buyers in the market area who would be looking for a similar type of home. These 49 comparable properties have all sold in the past 12 months. Their sold price range is $269-$349. There is a verifiable rate of increase in the market at this time but it is minimal, currently. The majority of those 49 comparables have very nicely finished basements or full in-law suites in the basement and also have brand new or recently upgraded kitchens of superior quality and materials. The sales/contract price of the one that I was asked to appraise, that contains an old, original builder-grade kitchen, no upgrades, and has an unfinished basement?
Unless there are some inground pools, tennis courts, or some hidden, outstanding, quite impressive anomalies that were completely omitted in all courthouse records, tax records, and also forgotten on the MLS for this property, if I accept this assignment, I will be abused, ridiculed, slandered, texted hate-texts, and likely called incompetent for 'coming in low and killing the deal' (Those things happen regularly when these situations arise; I know what to expect.)
Appraisers are blamed for being the problem. For 'coming in low.' (TIP: Appraisers do NOT 'COME IN LOW.' Market value is what it is. We just analyze and report the facts.) The correct terminology in these situations SHOULD be that the property is 'overpriced', 'over-listed', or 'being sold far above market value.' Appraisers are demonized for saving homebuyers and lenders from being ripped off, to put it plainly. Why? Because many of the financially vested parties in the transaction are very angry that things didn't go as they had hoped. They need a scapegoat. They flip the narrative to shift the blame elsewhere. If the involved parties are unable to renegotiate the deal closer to true market value, it's no settlement/no closing, no paycheck. I get that. It is unfortunate. No one likes to lose out on getting paid. But it is NOT THE APPRAISER'S FAULT IF THE CONTRACT PRICE IS UNSUPPORTED BY THE MARKET.
I hope this helps to clear the air and to demonstrate that the appraiser is your reliable source for truth in these situations. We can either ensure your investment is sound or save you and your family from financial ruin and potentially huge financial losses. Why would any buyer want an appraiser to commit fraud to help them pay, for example, $379,000 for a $300,000 house? How will this help when they go to refinance one day or try to resell their home and it STILL isn't worth what they paid for it 8 years ago? This appraiser can't imagine how that would anyone very happy or be beneficial. I personally prefer to NOT lose $79,000 the moment I get handed the keys to my new home. (Ah...the things we could do with an extra $79,000.)
Do people go to their butcher for dental advice? Do people schedule an appointment with their auto mechanic to sit down for stock tips and advice? Of course not. If you want reliable results, go to the true, trained professional in whatever matter you seek guidance. If it's real estate values, hire a real estate appraiser. We'll give you the truth.