Widespread Appraisal Fraud
We all know that over-inflated appraisals caused a lot of the mess that we're still working through. Appraisers are now on the other side of the pendulum, generally being very conservative with their valuations.
It is not uncommon when a house is sold today for the appraisal to "magically" come in right around what the home is selling for. In my area, it's usually $1,000 over the sales price. Like the bogus numbers of years past, this is another magical number that I have no idea where it comes from. I understand that all the lender wants to know is if the value of the home is at least what the sales price is. HOWEVER, since the buyer of the property is paying a professional certified appraiser to do an appraisal, shouldn't the buyer be entitled to an accurate valuation of the property they are buying?
In my opinion, if an appraiser is inflating an appraisal or if an appraiser is squeezing a number into a sought-after margin ($1,000 over sales price), BOTH scenarios are fraudulent! The number still is not based strictly on raw data, and therefore is not true.
Here's a synopsis of a recent transaction I had: One of my long-term tenants decided that they wanted to buy the home they were renting from me. Because they were great tenants for many years, I gave them a great price on the property. It was worth 45K-48K and I agreed to sell it to them for 36K. Of course, the appraisal magically came in at 37K. I explained to them that the appraisal was essentially bogus and that the property was worth substantially more than that. They were fine with it, but I thought to myself, "Why in the (insert expletive) am I having to explain the value of this property to the first-time home buyers when they just paid a professional to do this for them?!?!" If an appraiser is going to fudge appraisal numbers, either up or down, they are not doing their job and the appraisal is fraudulent. Comments are welcomed!