Many different institutions drew great criticism for contributing to the housing bubble which played a part in the financial crisis of 2008. Some of the blame also targeted appraisers who many believe should play a neutral role like a referee in a sporting event. But just as different umpires have diverging views as to whether a certain pitch is a ball or strike, real estate appraisers do not universally conclude that a particular piece of property possesses exactly the same value.
Nevertheless, there did develop a strong consensus that, just as fly-by-night mortgage brokers deluged the field in the early 2000’s seeking to take advantage of the real estate boom, the ranks of appraisers grew as well. This created a glut of real estate appraisers many of whom lacked the oversight or attention to rigor the profession demands. Also at the beginning of that decade, many state legislatures had passed mortgage fraud statutes, in part, to deter unscrupulous appraisers from improperly colluding with mortgage brokers or seller of real estate. After the crash, others relied on bargain basement or foreclosure prices as comparables inevitably causing their final appraisal to be skewed downward.
But according to a new poll just released by the National Association of Realtors, attitudes towards appraisers among others involved in the real estate industry are improving after several years of decline. While no one really knows if the accuracy of appraisals has increased, the complaints among the ranks of realtors have dropped. Several reasons may have caused this shift. One, as hinted above, appraisers are no longer relying on low values from foreclosures or “short sales” as examples of comparables as they were in the aftermath of the financial crisis when home prices were depressed. Another was a tendency to use parcels which were outside the geographic area of the home in question and the lack of awareness of the distinctions between neighborhoods within a metropolitan area. Third, a glut of poorly-trained appraisers were hired by appraisal management companies more than willing to assign bulk appraisals at low costs to these appraisers. Finally, many appraisers failed to pay attention in certain local markets that property values were on the rise.
Hopefully, this change in favorability reflects an across-the-board improvement in the quality of real appraisals. The real estate market relies on the accuracy of such appraisals to provide buyers and sellers with the best information available. This newly-released poll indicates the market may be operating on firmer ground.
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