Are Appraisers Still Necessary?

July 21, 2017

Over the years there have always been some who lack appreciation for real estate appraisers. When an appraiser appraises a property at or around the contract price in a purchase, some feel like we are just "justifying" or "rubber stamping" a pre-determined price. Some probably think "of course it appraised for that" because the appraisal met their expectations. Since a person's own expectations are usually valued more than other information from other sources, the data in the appraisal is minimized in their mind.  Good appraisers never appraise a property with the goal of just "hitting" the purchase price as a target. Our work should not be based on a predetermined number. That being said, there have at times been a small handful of bad appraisers out there in which that has been the case. I believe that there are not many of those kinds of appraisers left. Thank goodness! Many times the value estimated by the appraiser is around the same amount as the purchase price. When this happens it means that all of the work that the appraiser has made to estimate the market value of the subject simply reflects that the purchase price is reflective of the market value of the property being appraised.(Based on the definition of market value being used in the appraisal) 

 

Sometimes the estimated market value comes in below the purchase price. In this case, some just simply dismiss our work as appraisers. In this situation some accuse the appraiser of not working "hard enough" on the appraisal or of not knowing what we are doing. I assure you that this notion is the farthest thing from the truth.

 

However, when the appraiser's estimated market value is around the same amount as the contract price, does that mean that the appraisal was a waste of time and money? Imagine going to a physician once a year to get a physical.  Every year, the doctor says that we are healthy with no issues. Would we value the doctor less because they told us what we wanted to or expected to hear? Or would we be relieved to know that a professional who has extensive training and skill has confirmed our hopes that we are healthy? We value the doctor's opinion. And what if they say that we need to make some adjustments to our life to better our health? Would we do our best to follow their advise? Of course! We would value that knowledge.

 

When a real estate appraiser estimates the market value of a home to be at or around the contract price on a purchase, why is it that some in the industry