You’ve got to blame someone, right?  The appraisal industry has been under fire for some time now because of the housing market meltdown.  I think it’s definitely a case of one bad apple spoiling the whole basket, though.  Okay, maybe not just one but there were many bad appraisals done from 2004 to 2007 – appraisals that indicated housing values skyrocketing and making investors giddy.

There were MANY good appraisers, too, so it’s evident that they aren’t solely to blame though.  There were lenders pushing the appraisers to edge the appraisal up by $2,000 or $10,000 or $100,000.  Realtors also didn’t want to see the transaction go away, so we also offered alternate comparables to the appraisers if we didn’t like what they had to say.  Buyers really couldn’t help themselves … who wouldn’t want to buy when the interest rates were shockingly low and loans were easy to come by?

The heyday has ended, though, and in retrospect appraisers are still getting blamed.  As a result, they are *still* causing concerns by now undervaluing real estate!  According to MSNBC.com,

It wasn’t the first time that Katherine Scheri ruined a real estate agent’s day with a low property appraisal.

Scheri, a real estate appraiser, had sized up a three-bedroom, two-bath house in Santa Ana, Calif., for $30,000 less than what the buyers offered to pay. A typical deal-killer for a seller.

The agent urged the lender to force Scheri to consider several other properties that could back up the original $310,000 sale price.

I’ve had my day ruined before, too.  The bottom line is to ask the seller how badly they want to sell.  Enough to drop the price to the appraised amount?  Ultimately it’s up to the buyer and seller whether or not to proceed if an appraisal comes back low.  However, agents should prepare both sides of the transaction for the possibility of an appraisal getting in a good gut kick first.