The central problem is bias. Always bias. Had a gal call me a week ago, in a sexy voice said she wanted a retroactive of her and her husband's house as of a year ago because she says she wants to buy him out. But she says, it's an "informal" thing. Now, you know, I know, more likely than not, FAR more likely than not, she wants a low-ball appraisal because that means she is going to pay less. Look if they are separating or getting divorced (and from what she said it was only separation), most likely there is not that much sympathy to be fair. Also, there is, relatively speaking, a good chance this could wind up in court. So, I says, well yes, but I charge more than the typical appraiser because I am very accurate and hit the value on the head. She asks how much? I say $700 base. Oh she says. that is more than she expected. Could I refer some other appraiser who charges less or could she just use a website like Zillow. I said sure, but Zillow isn't accurate. I suggested she and her husband might agree on taking an average of Redfin and Zillow, if this was just some kind of informal agreement between them.
But my sixth sense tells me, she wants an appraiser to do her bidding.
What I didn't tell her was that Zillow and Redfin can be way way off, that people tend to think their home is worth a lot more than it is, and that her best bet is to get an accurate appraisal to find out how much the home is really worth, and then decide what to do with her husband. But, I don't even want to mess with these kinds of appraisals. Thankfully, it didn't go any further.
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The truth is that in most cases the people who are interested in true value are really only auditors and analysts who sit in the background far removed from appraisers. Well, except for occasional investors, who are basing their investment decisions on market value ( and I believe most are not).
The kind of clients appraisers deal with have agendas. Buyers are not really interested in market value, they are interested in In Use value and an appraisal that comes in as low as possible, so they can save money. Sellers want an appraisal that is on the high side, at least good enough for their requirements. Lenders are interested in closing the transaction, AMCs are interested in optimizing their income and all that entails, - which is mostly successful completion of as many transactions as possible without running into repercussions.
No, the whole appraisal system is flawed, a farce, a lie. All appraisal should be done through an independent agency, where the frontline users of appraisals do not have any impact on which appraisers are chosen, their fees or their reviews.
