I think it's really a problem of different incentives.
Somebody (A) at the bank does not want to give out loans that are well beyond a properties value.
Somebody (B) _else_ at the bank is actually the one giving you the loan and makes money from you getting it.
So A requires B to have an appraiser so they can't completely run away writing loans. From talking to some real estate agents, the appraiser will only fudge so much for you. An appraiser might agree that the house is worth 750k even if they actually think its 699k but if you try to get a 700k loan for a 350k house they'll write down 350k in their appraisal.
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IIRC, the government's crack down on "junk fees" is mostly that you can't advertise a price and then inflate it later with fees. So as long as the bank states that they require an appraiser and their in-house cost is $X; it doesn't count as a junk fee. But if the bank says that the loan is going to cost say $5k in overhead and then later says it doesn't include appraisal fee then it be a junk fee.
> An appraiser might agree that the house is worth 750k even if they actually think its 699k but if you try to get a 700k loan for a 350k house they'll write down 350k in their appraisal.
This is kind of the point. The appraiser isn't trying to find the "true value" of the house, otherwise buyers would hire appraisers prior to even offering a bid.
The question that the bank wants answered is, "is this house sufficiently matched to loan amount such that if the borrower defaults, the house can be sold for enough money to recoup the loan?"
And if the answer is "yes", then they write down the number.
Somebody (A) at the bank does not want to give out loans that are well beyond a properties value.
Somebody (B) _else_ at the bank is actually the one giving you the loan and makes money from you getting it.
So A requires B to have an appraiser so they can't completely run away writing loans. From talking to some real estate agents, the appraiser will only fudge so much for you. An appraiser might agree that the house is worth 750k even if they actually think its 699k but if you try to get a 700k loan for a 350k house they'll write down 350k in their appraisal.
--
IIRC, the government's crack down on "junk fees" is mostly that you can't advertise a price and then inflate it later with fees. So as long as the bank states that they require an appraiser and their in-house cost is $X; it doesn't count as a junk fee. But if the bank says that the loan is going to cost say $5k in overhead and then later says it doesn't include appraisal fee then it be a junk fee.