The simple answer is: yes. Pressure upon appraisers, from those who have an economic interest in the outcome of a given transaction (such as in a sale, a refinance, etc.), is an all too often and all too common problem. Many lenders and real estate sales agents merely want the deal to close in order to collect their commissions; thus, realistic appraisals can and do thwart their desires to make money. In my opinion, it is in the best interest of borrower, buyer, and/or seller (although not necessarily for the sales agent or lender) to have a realistic assessment of his property’s value, not a value pumped up in order to make the deal go through. A falsified value can cause significant problems later on.

Good appraisers will resist this pressure, even if it means turning down the assignment.

How do I know when an appraisal has been modified to make the lender or others happy or hit a target value?

Unfortunately, if you are the typical consumer, you will not be able to tell. You may even be talked into believing that it is a good appraisal, by the lender, real estate sales agent, etc.

If, on the other hand, you are interested in getting a realistic appraisal there are several things you can do: (1) Insist on ordering the appraisal yourself and instruct the appraiser to be realistic and thorough. Interview more than one appraiser and ask him questions that test his knowledge (or lack of it). (2) Inform yourself by taking courses or reading texts. (3) Don’t be seduced by a low appraisal fee. Cheaper is not necessarily better; in fact, sometimes the highest fee is your best deal. (4) Do your own sales research. Gather sales data, possibly from your local assessor’s and/or recorder’s offices, drive by the comparables, and then perform your own analysis. Check your work against the appraiser’s. (5) Hire another appraiser to review the first appraisal. However, be careful using this approach, as appraisal fees can mount up.

If an appraiser is close to the number needed to make the deal work, shouldn’t he just give it to them? After all, an appraisal is only an estimate anyway.

It must be remembered that an appraiser does not have the power to give or create value; he only reports it. If the data suggests a lower value than is wanted by some or even all of the participants to a transaction, that is the way it goes.

The fact that an appraisal is an estimate does not relieve the appraiser from deriving a realistic value estimate.

Why is an appraisal so expensive?

Typically appraisers charge around $250 to $450 for a typical residential form appraisal; sometimes more if there are complexities or distance issues. Lenders sometimes tack on an additional charges on top of the appraiser’s fee but still call it an appraisal fee. Considering the amount of work involved with the preparation of such an appraisal and the responsibility, this fee seems more than reasonable for the purchaser of the report.

An appraiser’s license is on the line every time he does an appraisal.

Residential appraisal fees pale when compared to commercial, condemnation, and special situation appraisal fees.

I would like to have an honest and realistic appraisal. How do I know if an appraiser is any good?

It is difficult for the average consumer to adequately judge an appraisal or an appraiser. The subject matter is very technical and easily confusing to the untrained.

Here are several possibilities: (1) Check with your state board of appraisal to see if he is in good standing. (2) If the appraiser in question had any complaints filed against him were they justified and did the board take any action against him. (3) Ask for and check references. (4) Ask about his experience and education. (5) Talk to him about appraisal. Does he seem to know what he’s talking about? Specifically ask him to explain the definition of market value.

The appraiser failed to note the built-in garbage disposal (or other minor feature) on his report of my house, but arrived at a market value anyway. Is this significant?

Generally, failure to observe and consider minor details is not significant. Remember, the appraiser almost never gets to see inside the comparable properties. So, some judgments or estimates must be made.

We needed a value of $100,000 to make this deal work, but the appraisal came in low.

Generally, I have found it’s not the appraiser’s value estimate that’s low but the expectations of the parties involved that are high. It is not the job of the appraiser to make deals work. Any appraiser who has not, as much a humanly possible, tried derive a realistic value estimate, has not actually done an appraisal but something else. If the final value estimate is not as realistic as possible, then what is it?