It kind of sounds like the first deal fell through because the buyer couldn’t find a lender that would accept that appraisal.
When the market is running toward increases the “most probable price” will usually be at the upper end of the range indicated by the closed sales because of the lagtime between listing and closing. When the market transitions and then goes into decline, the leading edge of that trend would generally be toward the lower end of the range.
It’s unfortunate, but over 60% of the current residential appraisers have come into the business in the last 5 years and have never seen a declining market. Many of these folks are not prepared for what happens, and a lot of them have been listening to their mortgage broker clients and the NAR PR blitz that it’s almost over.
I was teaching an appraisal class (continuing education) a couple weeks ago where one appraiser told me that if there were buyers in the market that meant the market was stable and there is no further decline. I was about speechless.
There are a lot of appraisers who were trained to automatically appraise to the highest value the comps will support. Mortgage broker clients tend to look at appraisals as a ratification of their loan rather than a tool to underwrite it. That leads to appraisers being trained to look at comp selection in terms of what the lenders will accept as opposed to which comps are actually the most similar.
That kind of conduct is wrong, but it largely goes unnoticed when times are good. This example came to your attention primarily because the market is in decline right now. Otherwise it would probably wouldn’t have come up.
