Don’t be mislead by a bad appraisal

It is common in valuation of residential real estate for a home owner to incorrectly believe that the value of their home is consistent withe the appraised value put forth by a lender’s appraiser. This is not always the case.

For an appraisal to be valid, the local appraiser must have expertise in the specific real estate property type being appraised. Also, the appraisal must not be biased.

In many cases, appraisers who do a significant amount of work for lenders (or an in-house appraiser at a lending institution) may be under pressure from the loan originator to be "cooperative". As such, the appraiser may have overstated the market value of the real estate to satisfy the desires of the loan being sought.

When an existing "bank" appraisal is referenced for a marketing effort, it’s reliability is reliant on the expertise and bias of the appraiser. Moreover, in all cases, a residential real estate appraisal is an estimate of value as of a specific date. If market conditions have changed since the date of the residential appraisal, it’s validity may come into question.

When seeking an appraiser, a good place to start is the Appraisal Institute, whose qualifications are significantly more stringent that the state licensing.

Another recommendation is to consider hiring an appraiser who is a member of the Relocation Appraisers Consortium. These residential real estate appraisers focus their efforts on the employee relocation business, consumers of "real" appraised valued. These type of appraisers are different in that they are trained to estimate the future value of a property based on a specified marketing time and forecasted market conditions. In short, in my opinion, they are the best trained group of appraisers in the United States.

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