In 2012 I purchased a home. When the appraisal came back it included a shed that did not belong to the property we were buying. The shed was valued at 4% of the purchase price, so I requested an updated appraisal without the shed and looked forward to a potential bargaining chip with the seller. When the new appraisal came back, the shed was no longer on it, but all of the numbers were adjusted to hit the same value as before. It was then that I realized there is a science to appraisals, but it sometimes can feel like science fiction.
In the last decade a lot has changed, but for some borrowers the problems with appraisals have only become more apparent.
Accurate appraisals help borrowers avoid the risk of foreclosure that can occur if there is an overvaluation, and they are unable to sell for what they owe. Proper valuation also protects their ability to access equity in a sale or cash-out refinance.
On Aug. 2, 2023 Fannie Mae and Freddie Mac issued joint announcements updating Appraiser Independence Requirements. The announcements also introduced guidelines to Property Data Collector Independence requirements.