As the housing market is still plagued with uncertainty about whether distressed conditions will continue to be seen nationwide, one trade association says the blame for the state of the industry should not be placed against appraisers.
According to the Appraisal Institute, appraisers should not be at fault for “low” home values that are evident across the country. The Chicago-based global association, which has approximately 24,000 members in nearly 60 countries, said the real estate appraiser is not the reason why a homeowner can’t sell their property or a prospective buyer can’t purchase their dream home.
“Appraisers don’t set the real estate market; they reflect what’s happening in the market,” said Sara Stephens, president of the Appraisal Institute. “Think of the appraiser as a mirror, reflecting the market. Obviously, the market is depressed—home prices have fallen far below the values of a few years ago. Many homes simply aren’t worth what their owners think they are.”
Stephens said accusations from real estate agents and homebuilders that the industry’s current conditions are due to appraisers producing opinions of value that don’t match a home’s listing, contract or sales price “nonsense” for delaying any type of recovery in the housing market.
“The fact is that appraisers are undertaking the same thorough research and thoughtful analysis that they always have in order to continue producing reliable, credible opinions of value,” Stephens added. “Don’t shoot the messenger.”
The purpose of an appraisal is to assist lenders in making lending decisions, rather than confirming a listing, contract or sales price, Stephens said. She added that there’s no reason to assume the contract price is the “correct” price simply because it’s higher than the appraisal.
Stephens said appraisers’ clients are not buyers or sellers, but lenders, and that appraisers know how to use distressed properties such as foreclosures as comparable sales when determining a reliable opinion of value.
“Qualified and competent appraisers know what adjustments to make, if any, when using distressed sales as comparables,” Stephens said. “They are particularly valuable when facing challenging assignments like those found in today’s market.”