Appraisal rules backfire in down market

Appraisal management companies blamed for undervaluation

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Inman Connect New York | January 29 - February 1, 2019

Enacting rules to curb abuses arising during a housing bubble, which don’t take effect until the succeeding financial crisis, can easily do more harm than good. This is the case with new rules requiring that property appraisals be insulated from pressures exerted by any of the parties with a financial interest in an appraised value: primarily lenders, mortgage brokers and Realtors.

Appraisals are informed judgments regarding the value of specific properties. They are not perfect because appraisers must work with incomplete information. Further, appraisers are subject to bias, and more so if less complete information is available to them.