MAKING SENSE OF THE NONSENSE
Providing Credible Appraisals in a Declining Market
Appraisers have been accused of prolonging the nation’s real estate downturn by developing
value opinions that are below proposed sale prices. Specifically, they’ve been criticized for
including foreclosure sales and so-called short sales among the comparable sales used in the
valuation process. But
Appraisers exercise sound judgment when gathering and analyzing information.
then determine which of those transactions should be used in the analysis to arrive at a
terms of location, size, condition and other features that buyers and sellers believe make a
difference to price.
it’s worth X or adds X to the value. Especially in distressed markets, cost may be higher than
Appraisers make adjustments based on market research and analysis.
and the subject property. Factors that may require such adjustments include atypical buyer/seller
motivations and sales concessions.
Appraisers adhere to basic principles when analyzing distressed sales.
is necessary to develop a credible value opinion.
the circumstances of each transaction … including whether atypical motivations or sales
concessions were involved, or whether the property condition was compromised.
atypical seller motivations
foreclosed property would not render it ineligible as a comp.
Appraisers abide by professional standards.
supply and demand factors relating to the specific property type – in order to make
The use of qualified, experienced appraisers – such as those carrying the MAI, SRA or SRPA
designation from the Appraisal Institute – helps ensure the
For further information, see
Additional information can be found on pages 137, 141-142, 147-157, 173-188, 297-314 and 315-343.