Real estate appraisals are outmoded

Perspective: Insiders need to rethink system of property valuations

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The real estate appraisal system is broken and needs to be fixed.

The fundamental problem is the conflict of interest among the lender who selects the appraiser, the borrower who pays for the appraisal and the investor who relies on the adequacy of the appraiser’s opinion. Lenders are in a powerful position to pressure the appraiser to “hit” pre-ordained numbers since, as a group, lenders don’t suffer the consequences of inflated valuations.