"The Appraisal Gap" [March 12] fails to discuss two major causes of this perceived "gap" in market and appraised values. The first, and probably most insidious, was collusion between lenders and review appraisers, who work for lenders, manipulate the market downward and reduce as much as possible a lender's exposure in the market. During the "down market" of the early '90s, review appraisers routinely cut appraisal values up to 10%, citing the "down market." This tended to prolong the perceived "down market" for several years and prevented an upturn in values until long after it was being felt in the market. The opposite is happening today. Reviewers and lenders are not allowing market values to be reflected in appraisals.
The other reason appraised values aren't reflecting the true market is that it takes three to four months for values that are established today to be reflected in the databases used by appraisers to develop comparable sales analysis. This leads to the economic lag factor now frustrating both sellers and appraisers. Yes, appraisers--because we would truly like to be able to appraise a property for a fair market value and thereby have satisfied customers.
Certified Real Estate Appraiser