Many in the real estate industry have tried to blame the market’s distressed condition on appraisers, saying that appraisers are at fault for producing opinions of value that don’t match a home’s contract or sales price, delaying a recovery in the housing market. But appraisers don’t set the market; they reflect what’s happening in the market.
It’s important to keep in mind that appraisals completed for mortgage transactions are not provided to confirm a sales price; they are used to assist lenders in making lending decisions. It’s troubling that some homebuyers and sellers (not to mention some real estate agents, home builders and others) assume that an appraisal is somehow “wrong” if it doesn’t match the listing or contract price. This is simply not the case. There’s no reason to assume the contract price is the “correct” price simply because it is higher than the appraisal.