Why Real Estate Appraisers Are the Only Objective Party in a Transaction

 Buying or selling a property is a significant financial decision that involves parties such as lenders, agents, buyers, and sellers. All parties have a financial stake in the transaction, except the real estate appraisers, who are the only objective party. These professionals do not benefit financially regardless of whether the deal closes or not. In this blog post, we will explore the roles played by each party and their financial involvement in a real estate transaction.

Real Estate Agents

Real estate agents work with buyers or sellers to assist in the sale or purchase of a property. They earn a commission based on a percentage of the sale price. Hence, it's in their best interest to ensure that the property sells for as much as possible. They are also incentivized to close deals as quickly as possible, resulting in potential conflicts of interest. As such, they may be tempted to work in favor of one party over another to expedite the transaction.

Lenders

Lenders provide financing for the purchase of a property. They benefit financially from the transaction, earn interest on the loan, and may charge additional fees. Thus, they are motivated to ensure that the property sells for its highest value. They may also be tempted to cut corners to approve the loan, resulting in higher risks for the borrower.

Buyers and Sellers

Buyers and sellers have a direct interest in the sale price of the property. The higher the sale price, the more the seller profits, and vice versa for the buyer. Buyers and sellers may also have a personal attachment to the property, which may cloud their judgment when evaluating the property's value.

Real Estate Appraisers

Real estate appraisers are licensed professionals who provide an unbiased estimate of a property's value. They are not affiliated with any party and do not have a financial interest in the transaction. Instead, they are paid a flat fee to objectively determine the property's fair market value. They consider various factors such as the property's condition, location, and current market trends to provide an estimate that is in line with what the property would sell for in the current market.

Real estate transactions involve various parties with different financial interests. While agents, lenders, buyers, and sellers all benefit financially from the deal closing, the only party that does not stand to gain financially is the real estate appraiser. With nothing on the line, they are the only party that can provide an impartial and unbiased opinion on the property's value. Thus, real estate appraisers are crucial for ensuring that all parties involved in the transaction can make informed decisions and have confidence in the value of the property.