Quote:
Originally Posted by LiLShorty4lyfe
If they do their job, and use COMPARABLE comps (that is what comps stands for, isn't it?!) then it should work well. It isn't about meeting the seller/buyers expectations it is about doing their job competently. Not for the bank, or the seller or buyer. Do what is right and it will work out right.
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Comps won't actually tell you if there's a bubble, where housing as a whole has an inflated price.
As I see it, it is about the bank, actually. The appraiser is there to make sure the collateral is actually worth enough to cover the case where the homeowner defaults. When the banks actually cared about default risk, this worked fine. When the banks were able to resell mortgage loans, they no longer had any skin in the game and stopped caring about default risk and just wanted more volume of transactions instead.
Theoretically, it should then have been the investors who cared about default risk, but it turned out that many of these investors were working for Wall Street firms and thus were essentially playing with other people's money.