1) Pick three homes that you feel are comparable.
2) Pick out the material differences between those homes and your client's
3) Make up a value for each of those differences, and adjust accordingly
(Unofficially speaking) If you don't like the number you come up with, just make different decisions in steps 1-3 until you get the number you want.
It's different now, not necessarily less subjective but the incentive for creative appraisals has been drastically reduced. Prices have to be justified and mortgage brokers can't interact with the appraisers now. Apprasing has to be entirely separate from the underwriting process and is now entirely blind. In some states, appraisers are now accountable for significant deviations. The turnaround time is also significantly longer. I've heard reports from some people of appraisals in bigger markets taking as long 9 weeks.
It's actually a pretty interesting process, ripe for disruption if anyone wants to take a crack at it.
For the most part, the banks and brokers re-sell those loans immediately, so they don't stay on their books. All they need to protect them from lawsuits later is proof that they followed the process to the letter -- which involves getting a written appraisal.
No mortgage broker or Realtor ever got rich by picking a fight with the appraiser to lower the appraised value ... there is literally nobody present at the table who has an incentive to push the value down.
If the bank won't write a loan for the agreed price, the original contract is void, since it's contingent on loan approval. If the seller's heart is set on moving, he might well lower the price.
But it's been a decade now since the housing bubble revealed that appraisals are meaningless.
Why has no one eliminated them?
Whether those efforts were successful or not is another discussion.
We ended up just guessing high and lowering our price a couple of times until someone bit.
The appraiser just needs to make sure that the number isn't fraudulent or crazy.