There are definitely laws and lender requirements that should make appraiser selection somewhat random and their findings somewhat neutral, but based on my house buying experience I don’t believe for a second that they’re effective. We made a bunch of offers and somehow the appraisal was always right at the offer price or ~5-7k above. I’m convinced that the appraisers somehow have knowledge they shouldn’t and covert/indirect mechanisms exist to motivate them to play ball to make deals go through.
Besides small sample size giving me a skewed sample, the other explanation I can think of for this is that appraisal is a fairly exact science and realtors have mastered pricing based on it. Considering the volatility of my market, lack of comparable sales, and the IQ of the realtors I’ve met that seems laughable.
> somehow the appraisal was always right at the offer price or ~5-7k above.
Yes, this is pretty normal. Contrary to popular belief, appraisers don't have any sort of special data or processes that allow them to determine the exact value of a house in any given market (because such a value does not exist). An appraiser is working for the bank and simply serves as a risk mitigation officer. Their job is not to answer "what is this house worth?", it's to answer "is the deal you're lending money on within reasonable bounds?". So when the appraisal value comes in at or around the sale price - it's just a simple "Yes". And when it comes in somewhere else, it's a "No".
There is generally zero incentive for an appraiser to inflate prices (today, this was not always true in the past).
The housing market is vast and complex, without question. And still, the reason that prices go up is overwhelmingly the simple fact that buyers are willing and able to pay those prices.
Besides small sample size giving me a skewed sample, the other explanation I can think of for this is that appraisal is a fairly exact science and realtors have mastered pricing based on it. Considering the volatility of my market, lack of comparable sales, and the IQ of the realtors I’ve met that seems laughable.