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Could an appraiser intentionally skew an appraisal to result higher than it should be?

I purchased my home 3 yrs. ago. We gave an offer of the asking price of 275,500.
Believe it or not, I was hoping the appraisal would result less and that we would purchase the home for less. The home appraised at 276,000. At the time, I thought nothing of it, and went through with the purchase. I am just curious as to whether or not appraisers could intentionally skew an appraisal higher than it should be. I am now trying to refinance and the value in my home has dropped by 40,000.00.Therefore, I am not eligible to refinance because my loan to value is so low.  I realize that home values have been decreasing over the past several years, but I was shocked to see how drastic it was in my case over just a couple years period of time. I know there is nothing I can do about the past but the curiosity is eating at me... Can an appraiser be in cahoots with a lender or realtor in order to seal a deal?          

michelle in South Fl
  • June 16 2012 - Milwaukee
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Answers (3)

Once upon a time (not that long ago), appraisals were regularly written for the amount offered on a home. But everyone knew that and IDEALLY, people only offered what a home was worth...they didn't rely on the appraiser to "save them." After the bursting of the bubble a lot of things changed, one of which is that the appraisal is no longer a formality, it is suppossed to be done without collusion with the lender, seller, buyer, realtor....anyone.

All that being said, some folks have seen the value of their home come in at half what they paid just a few years ago, in some of the harder hit areas (with Florida being one of the hardest hit areas).

We still see people who are bidding high on a home in order to get the contract with the intention that they will be able to renegotiate when the appraisal comes in at a lower number. Then they are furious when the appraisal comes in as high or higher than the asking price. I believe people need to do thier own research and due dillegence when offering.
  • June 16 2012
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Profile picture for daveskow
Look at the data appraiser used on both reports ... This should give indication Appraisals are not scientific ..... There will always be a range of value that appraiser can bring value in at And finally yes ... An appraiser could skew values if needed ..... More so 3 yrs ago than now
  • June 16 2012
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Nobody forced you to write the offer that you did. You offered an amount that you were willing to pay for the property.   Now that the value has dropped over the past 3 years, doesn't mean it is the appraisers fault.

Appraisers will get paid regardless of whether they hit the sales price, come in higher, or come in lower. So your "conspiracy theory" that they purposely appraise homes higher than normal is invalid. If a lender feels that an appraiser purposely appraised a property higher than true market value, they will reject the appraisal and can blackball that appraiser for future business. No appraiser is going to risk losing business over one deal.

A 14.5% drop in value over the last 3 years is actually pretty good. (especially in florida)  Many people have seen a LOT worse. Lots of foreclosures and short sale homes coming onto the market has put a lot of downward pressure on home values. Add to that the fact that our economy is stuggling to get out of the recession and there are not a lot of people looking to buy or able to buy.

Many people are unable to refinance because of lack of equity. However if your loan is owned by Fannie Mae or Feddie Mac and was taken out prior to June 1st 2009, you may still be able to refinance under the HARP program.
 

  • June 16 2012
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