In the past three months I have sold five properties where the appraisal has not come in at the agreed upon sales price. Thus far, we have managed to close four of them by getting the buyer to agree to pay an above appraisal price and/or the seller agreeing to reduce his agreed upon sales price. A real estate appraisal is supposed to be the market value, or value that a ready, willing and able buyer will pay after a property has been properly exposed to the marketplace. Clearly, the appraisers are not getting it right. In the luxury real estate market we used to be able to request experts in the market that knew the neighborhoods and values well. The new procedures have eliminated this option and I often see inexperienced appraisers that just don’t know the luxury market. Their product is poor and often they use very uncomparable properties. The fact that buyers have repeatedly had to pay over the appraised value demonstrates the flaws in these appraisals. When will we learn to quit overreacting to crisis and go back to what used to work quite well in the luxury real estate world, using the best qualified experts to get the job done?
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