Quantifying Appraisal Risk

A while back we talked about how appraisals can impact a deal. A new twist is that buyers have recently been making their offers more attractive by voluntarily removing the appraisal clause. They take the risk that the appraiser finds that the “value” of the home to be less than the contract price, and they have to bring more cash to the closing. Today we’re going to quantify that risk. Banks require appraisals to help

The Evolution of Appraisal Risk

Real estate appraisals have been a hot button issue over the past few years. First, appraisers were implicated as a contributing factor to the real estate bubble in the mid 2000s. The line of thinking was that they were focused less on the accuracy of their results than on their next deal. Next, the government responded by clamping down on the appraisal process to prevent lenders and real estate agents (who were both also implicated