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After-Sale Evaluations: Appraisals or Justifications?



This article argues that most residential evaluations done for lenders are not appraisals; instead they are justifications for the amount of the loan applied for by the appraiser. The appraiser, by knowing the contract price, is under conscious or unconscious pressure to estimate value at or above the already agreed-to price. The research tests two hypotheses. First, appraisers are as likely to estimate value above contract price as below it. Second, staff appraisers are as likely to estimate value above contract price as are independent appraisers.

Suggested Citation

  • Jerry T. Ferguson, 1988. "After-Sale Evaluations: Appraisals or Justifications?," Journal of Real Estate Research, American Real Estate Society, vol. 3(1), pages 19-26.
  • Handle: RePEc:jre:issued:v:3:n:1:1988:p:19-26

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    References listed on IDEAS

    1. Curley, Anthony J & Guttentag, Jack M, 1977. "Value and Yield Risk on Outstanding Insured Residential Mortgages," Journal of Finance, American Finance Association, vol. 32(2), pages 403-412, May.
    2. Robert O. Edmister & Harry E. Merriken, 1988. "Pricing Efficiency in the Mortgage Market," Real Estate Economics, American Real Estate and Urban Economics Association, pages 50-62.
    3. Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, pages 1-37.
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    Cited by:

    1. George H. Lentz & Ko Wang, 1998. "Residential Appraisal and the Lending Process: A Survey of Issues," Journal of Real Estate Research, American Real Estate Society, pages 11-40.
    2. Marvin L. Wolverton & Paul Gallimore, 1999. "Client Feedback and the Role of the Appraiser," Journal of Real Estate Research, American Real Estate Society, pages 415-432.
    3. Jordan Rappaport, 2007. "A guide to aggregate house price measures," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 41-71.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services


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