As to “getting the value,” I cannot stress enough that is not the purpose of the process. The ethical and compliant lender wants to know what the most probable price they could get for your house should you default on the loan. Appraisers are subject to huge amounts of pressure to “get the value” in various direct and indirect forms. Whether or not the appraisal “works” for the lender or the borrower is irrelevant to the validity of the appraisal. The comparables are adjusted in “the grid” and result in a post-adjustment range of value. Your statement that we develop a value from that range is accurate. One sale may be only a month old, one may be a block away, one may require few adjustments, etc. and we weigh those differences. In the case of a sale, oftentimes a property is listed for an above-market price whether existing or new construction. In a refinance, the borrower wants an amount that will allow them to pay off their existing mortgage and take out enough money to pay off the credit cards and take a vacation. Those are very valid issues for the property owner but are not within the appraiser’s consideration.

Comparables can be selected that will support a certain, targeted value but, to many within the process, that is fraud. To have adequate comparable sales within a 1/4 mile of the Subject property but to use sales a greater distance (because they sold at a higher value) is one example. Another ploy is to omit certain factors of a property, such as not mention (or adjust for) an in-ground swimming pool offered by a sale. I have completed numerous review appraisals for fraud investigation departments where the lender is pursuing legal action against the appraiser in order to recover their lost money.

One last item is that we are dealing with historical data, comps that closed prior to the inspection of the house (but no longer than a year ago.) Concessions in the form of closing costs, furniture, big screen tv’s, vacation vouchers, outbuildings, etc. are deducted in the grid and reduce the net price of the house. So in the current housing market where some areas are seeing the builder offering a whole house furniture package or a detached garage in order to entice buyers, the value of that feature is a reduction in the overall value of the property. $500,000 purchase price – $40,000 outbuilding=$460,000 house value. If you paid $500,000 2 years ago for your house and the brand new house down the street just sold for $500,000 with a “free” $30,000 swimming pool…well, your house is probably worth about $470,000.