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If you read my original post, you can see that the same house with the identical contract (including price) yielded 2 different appraisals. $30,000 difference and all that was different was the appraiser...
The contract price is relevant as one data point. USPAP requires appraisers to consider all the terms and conditions of the contract.
The contract itself is relevant for consideration of seller concessions. The price itself is not.
I can list and sell my house for $500,000 and somebody may be willing to pay that. But that doesn't mean that the market will bear that price and the lender won't loan that kind of money on it.
I will probably regret wading into this, and I don't really have a dog in this race. But isn't the very definition of what "the market will bear" that a buyer is willing to pay the price? So if a buyer is willing to pay $500,000, doesn't that mean by definition that the market will bear $500,000?
Don't get me wrong, I agree with your points in this thread Annemieke. I'm just confused about that part of it.
I will probably regret wading into this, and I don't really have a dog in this race. But isn't the very definition of what "the market will bear" that a buyer is willing to pay the price? So if a buyer is willing to pay $500,000, doesn't that mean by definition that the market will bear $500,000?
Don't get me wrong, I agree with your points in this thread Annemieke. I'm just confused about that part of it.
"The Market" is not one sale. If the bank takes over the house they aren't going to be selling the house back to the same person who bought it at the same price.
I will probably regret wading into this, and I don't really have a dog in this race. But isn't the very definition of what "the market will bear" that a buyer is willing to pay the price? So if a buyer is willing to pay $500,000, doesn't that mean by definition that the market will bear $500,000?
If that buyer is paying cash and is willing to pay $500K for the house, that's his business.
If that buyer needs to use other people's money to finance the purchase, that $500K has to have some basis for reality.
If it was your money, would you lend the buyer $500K if one or more apprasials said the market value is substantially less than $500K and for example, the unsold inventory remains high and values continue to decline which is how it remains in many parts of the U.S., right now. The unsold inventories in local markets is the best near term crystal ball.
Appraisals are not that objective. In my case, there was a $30,000 difference between 2 appraisals done within a couple weeks of each other based on which comps they used and how much was adjusted. Since that is the case and lenders can't take a "range", the contract price seems relevant. If there is an acceptable range that can be within 5-10% of purchase price, why can't the appraiser look at the fact that the buyer is willing to pay that much as evidence to support the higher side of the acceptable range.
Unsold inventory is important but in our case, according to our buyers, all the available inventory nearby in a similar price range was in much worse condition than ours. The appraisal process gives some weight to condition but I bet it is less than some buyers would.
It is a violation of both federal and state laws and comes with both civil and criminal penalties to be less than objective. It is stated specifically that an appraiser cannot be an advocate and that an appraiser cannot be biased. Crossing that line is, at a minimum, cause for revocation of their license and the appraiser can incur fines amounting to as much as $10,000 per day from the time the report is filed to the time the bias/advocacy is discovered. These laws are found in the individual states statutes as well as in Dodd-Frank Act and the Truth in Lending Act.
Outlandish, you don't have a clue as to what you are talking about and are spreading lies and misinformation. Please quit it as you are misleading other readers. Share your own experiences and allow others to read into it what they will. But please do not make misleading statements that are presented as facts. Others may not know how little you know or how misinformed you are.
It is a violation of both federal and state laws and comes with both civil and criminal penalties to be less than objective. It is stated specifically that an appraiser cannot be an advocate and that an appraiser cannot be biased. Crossing that line is, at a minimum, cause for revocation of their license and the appraiser can incur fines amounting to as much as $10,000 per day from the time the report is filed to the time the bias/advocacy is discovered. These laws are found in the individual states statutes as well as in Dodd-Frank Act and the Truth in Lending Act.
Outlandish, you don't have a clue as to what you are talking about and are spreading lies and misinformation. Please quit it as you are misleading other readers. Share your own experiences and allow others to read into it what they will. But please do not make misleading statements that are presented as facts. Others may not know how little you know or how misinformed you are.
Moderator cut: personal remarks
Everything I have stated is a fact. I did not say that appraisers do not try to be objective. I did not say that appraisers are biased. I am saying that appraising in general is not that objective. Case in point, the $30,000 difference by 2 appraisers in the span of 2 weeks--same property, same contract. Explain how that can occur if appraising is so objective.
If you spend any time on the appraisal forums you will see that appraisers themselves acknowledge that it is an opinion of value and that there is not one number that every appraiser will settle on. Many appraisers would rather give a range than a specific number (even an appraiser in this thread acknowledged that).
I was stating my opinion that since there appears to be an acceptable range (judging by my own experience with 2 apparently reputable appraisers), that the appraiser could use the contract price as a data point (as long as the contract price is within that range).
Please enlighten me as to what lies and misinformation I am spreading. Moderator cut: personal - off topic
By the way, regarding my not having a clue, I was able to put together an appraisal appeal that got the lender to order a field review. I did this after thoroughly researching many different resources, including USPAP and appraisal forums. I'll say it again, it's not rocket science. Even among appraisers, there are differences of opinion on many different aspects of appraising.
Your profile says that you are a residential real estate appraiser, so I guess I understand better why you are so upset.
anytime you state that "Appraisals are not that objective." you are both lying and spreading misinformation. Just as there are those cops who use their authority inappropriately, the great majority are are honest hardworking public servants so are there appraisers who are not impartial. But the overwhelming majority are. so please, quit lying because you are frustrated.
The opposite of "objective" is not "biased." It is "subjective." Objective means there is no judgement involved. For an appraisal to be completely objective, it would need to be based 100% on measurable factors, which are agreed upon by all parties and weighted the same way by everyone. The result would be the same every time, given the same property and market, no matter the appraiser. That is demonstrably not the case. It is not an insult to appraisers to say it's somewhat subjective. In fact, I'd say it's more of an insult to say it's totally objective, because the hard-earned judgement they bring to the table is what makes a skilled appraiser valuable, isn't it? If all they're doing is plugging numbers into a known formula, to get a totally objective result, anyone who can type can do it.
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