In our current market place things are a little strange, but one practice that's been around for years that always baffles me, is the practice of the appraiser getting the contract. I'm all for getting a deal done, but when we all are clammoring for accurate appraisals, why on earth would you taint the results by giving up the contract.
I've certainly heard the side of the argument that the appraiser needs to know the ballpark to see if it's a waste of time or if he needs to "stretch" it. That admission alone makes me wonder about the money our buyers are paying for appraisals. It's rare in Georgia to have a low appraisal, but you'll be hard pressed to find anything over the contract price. In fact, you could be sitting on $100K in equity but the appraiser will price it right out at the contract price.
Anyone want to step up and defend this practice? I'm open minded.
I do like getting deals done and having a good appraisal is part of it. Unfortunately, it makes it difficult to explain to a buyer, when they buy a home under market and the appraisal comes in at contract. Given the market conditions, this happens quite a bit. Case in point, at the beginning of the year I offerred, "I'll save you 3% on your purchase or I'll pay the difference." At this point of the year, I could have said 5% and still been fine!
Wow Larry, that's straight out of the real estate book. Too bad that's not how it works in practice.
I should have added that to the post though, so thanks!