Can a seller also have a contingency? For instance, can you negotiate that you will meet the buyer's demands to make certain repairs and/or pay for closing costs as long as the buyer is able to pay the negotiated price? I don't remember how the timing works with the appraisal.

Mike...
Is it possible the selling property is 'over valued' instead of 'under appraised?'

When as you say, so many properties in the area are selling at prices under what you would consider 'normal', then they are the New Normal for the area.

Remember, those are negotiated sales that we appraisers have no part in. We merely report transactions that have occurred for properties similar to the property you (and others) are trying to sell.

Instead of blaming appraisers, RE agents should do a better job tracking the market in the specific area, and then accurately show prospective sellers what has been happening in terms of home sales prices. This needs to be done with COMPARABLE properties to the prospective sale property, not just overall prices for heterogenious neighborhood properties that may not be similar to the prospective sale property.

this guy is of the opinion that the appraiser just makes up value...if the market says a home is worth X...then it's worth X...not the appraiser....if the buyer or underwriter wants a value or purchase price to be considered legitimate...let them either pay more or live with the responsibility...this realtor thinks the appraiser is a god like figure who can just deem a property's value without justification or potential ramifications..oh that's right, he's a realtor, he knows everything.

Jamie Blogged about my appraisal nightmare a few months ago. The appraisal in 10/10 was $115K, The appraisal in 6/11 was $55K and the appraisal two weeks later was $95K. Interesing how property values can move $40K in two weeks, just by moving the comp sales to the right of MLK Blvd a few blocks instead of to the left of MLK BLVD.

First off Mike Klijanowicz should be aware that the HVCC has "sunset" and is replaced by "AIRS". Appraiser Independence Requirements.
Then there are some definitions he needs to understand. The first is the definition of "MARKET VALUE" as provided by the Dictionary of Real Estate Appraisal.
"The most probable price which a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and seller each
acting prudently and knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale as of a
specified date and the passing of title from seller to buyer under conditions
whereby:
• Buyer and seller are typically motivated;
• Both parties are well informed or well advised, and acting in what they
consider their best interests;
• A reasonable time is allowed for exposure in the open market;
The next definition is for the principle of "SUBSTITUTION.
"The appraisal principle that
states that when several similar or
commensurate commodities, goods,
or services are available, the one
with the lowest price will attract the
greatest demand and widest distribution.
This is the primary principle
upon which the cost and sales
comparison approaches are based."
Then he should realize, and admit, that many of the Short Sale and REO offerings on the market are priced by realtors through the use of BPOs (Broker Price Opinions) produced by realtors with the goal of obtaining a listing that will sell quickly with little or no effort on their part.
So! It seems that, in many cases, REO and Short Sales ARE the market. AND it appears that the market is set by the realtors.
Further. A sale price that is excessively above or below those of comparable properties is a vagarie and must be excluded from the analyses.
Finally. I find that many times an offer is made that is within a market value range is no longer acceptable by the time an appraisal is done due the the ongoing decline in the market. In some areas
There is plenty of blame to go around for the current market conditions. There are few proffessionals that are willing to shoulder any of that blame.

actually the links you provide simply say that realtors think apprasials cancelled or lowered the sale price in 1/4 of their deals not why appraisers done one thing or another....a more detailed look at the HVCC shows that it was almost completely gutted in june of last year by Dodd/Frank and that banks and mortgage firms are likely flouting the new law by paying appraisers a pittance...not that appraisers are under pressure to come in low...but that they are being priced out of spending a reasonable amount of time to do a quality appraisal and are forced to do cookie cutter form-based appraising that includes lots of distressed properties and foreclosures in comps.
http://www.massrealestatelawblog.com/2010/07/24/a-failed-appraisal-experiment-to-end-the-home-valuation-code-of-conduct/

Appraisers and Realtors make their livings off real estate transactions so by all the logic both have espoused above, they are not adversaries. However, Dave the Appraiser over-simplified his response - yes the "comparable sales" are negotiated but often finally negotiated after the appraisal and that is the number that goes into public record. It is not the price that a willing and able (given a negotiated price appraisal) buyer and seller had initially agreed on.

Mr. Klijanowicz:

Background: I sold Real Estate for 10 years, became a Broker, and then in 1986, became an SRA Appraiser.

FYI: *New High Sale Prices* are not made by a run of the mill buyer with
(typical at this point in time)
a 5% cash down payment.

No..

NEW HIGHS are made by the cash-rich buyer
who *must have* that particular house,
(for whatever reason)
and is willing to overpay for it,
AND puts down 25-30% CASH down payment.

In that scenario, the Lender will say:
"Well, go right ahead!
"Our appraisal says value on this $200k purchase is only $190k.
“But you want only $140k mortgage, and we feel safe loaning you *that* amount of money.

Nice difference from having an appraisal of $190,000 on a $200,000 sale,
and a loan of that same $190,000
… especially when the Seller gave the buyer an allowance of $10,000
for new carpets, so the Buyer has exactly NO cash, and *negative equity* as of Day #1.

Appraisers have been and today are regularly sued for “over-valuing” properties during the Boom.
When was the last time you heard about a Salesman being sued for “over-valuing” properties?
When a Salesman says this $300,000 house is easily worth $450,000, it’s just “puffery” according to the courts.
When an appraiser says that same $300,000 house is worth $350,000 he can be sued; just how fast would YOU pop put a $350,000 price tag on that house??
.

While were dragging people through the center of town, let's not forget Realtors who played such an important part in pressuring appraisers to keep 'up' with values or label them as 'conservative' and urge lenders not to use them. Realtors shoulder a great deal of blame for putting people in houses that couldn't afford them.

Here's a suggestion for a topic I'd like to guest blog. I suspect it would illicit a real barn-burner of a discussion thread:

Do real estate agents offer anything of value, or are they a net-hindrance to the transaction in today's age of the internet and instant information?

Can't help but think of how these "under-appraisals" could be smoothed over without the average 6% cartel commission.

Given low levels of real estate activity in a market that is a moving target, valuing a heterogenous product like a piece of real estate becomes very difficult. The appraiser has a high level of subjectivity in his assessment, because there aren't lots of recent comps on similar houses (like when you have new townhomes being built in a development).

My opinion is that a willing buyer and seller who have undertaken an arms length negotiation of appropriate price and value should be the most important factor in determining value. The appraiser's primary job is to be a reality check to ensure that the bank isn't getting fleeced.

When appraisals come back at 1%-3% under the sales price, it reeks of a CYA approach to the task. The 1%-3% isn't material to the bank (the probability of default is not significantly decreased), nor the buyer (the buyer was fine with the slightly higher price). All it does is tick off the seller, who is already taking a beating because of a depressed market.

We have experienced this with a high level of frequency since the market turned down and I would agree with Mike's comments that appraisers are looking over their shoulders when they do appraisals, rather than being 100% objective.

Ross's response is baffling. Ross apparently believes we appraisers only use Listings for comparables, because that's the time when prices are negotiated. Once the sale closes, that's 'the price.' Those are the sales we appraisers use in reports.

But we also normally include two listings to show underwriters the 'state of the market today' so that they can see what an active Comparable current market is doing.

Remember, appraisers don't make the market, and are not responsible for fluxuations in market prices. We merely report recent activity.

The HVCC is gone with the Dodd/Frank bill. Re-write the article and I might get past the 2nd paragraph.

When will the government ban outrageous commissions for Realtors? Why should they earn 6% fees for listing a house on the MLS and driving clients to see the property? That's real hard work. Especially waiting on a client to sign a pre-drafted sales contract. Real hard work there. WOW.

This appears the same day that news breaks that home prices dropped 8% in the last quarter? Under-appraising is fiction, the market is simply in serious decline. Lenders are in the ninth month of a self imposed moratorium on filing new foreclosure cases. Unfiled case files are backing up. With an 8% decline in retail values, a whole bunch of homeowners just went upside down and a lot of them are going to throw in the towel and default. There is going to be a glut of distressed inventory hitting the market in coming months. We also face at least 2 more years of massive foreclosures. Downward pressure on retail prices is going to increase dramatically. We still face a long ride before prices hit bottom. Appraisals are accurate now. If they had been accurate between 2000-2007 a lot of the pain we are all feeling would have been prevented.