It is at this point that things start getting “interesting” with the appraisals. Fully half the residential appraisers we have right now have no familiarity with a declining market because they haven’t been at it long enough. A couple of the lenders are now requiring listing and pending sales in their appraisals and the underwriters are giving the appraisals much closer scrutiny than they were even a year ago.
The era of the stupid appraisal is (mercifully) coming to an end – for now anyway. Those appraisers who don’t straighten out are gonna get kicked out.
This crackdown will have some collateral damage – there will be a few legitimate sales contracts that will not appraise out because of the combination of fewer sales and extenuating circumstances with some of the sales that do close. That’s life during a declining market.