Buyer and seller agree on a fair sales price.
Buyer applies for a home loan with buyer’s real estate agent that is doubling as a licensed mortgage loan originator.
Appraisal is completed by an appraiser that has a close business relationship with that same realty agent/MLO.
Value comes at 10 percent less than agreed upon price.
Buyers agent/mortgage loan originator (one in the same) goes back to listing agent and seller playing hardball about dropping the price or they will walk.
Listing agent smells a rat and calls an independent appraiser.
Independent appraiser reviews appraisal and confirms the appraisal was low-balled.
Sellers stand their ground on price. Buyer drops out and home is resold and does close at a fair price to seller.
WARNING TO LISTING AGENTS: Be very careful when the buyer’s agent is also the mortgage loan originator. I’ve heard about this scam happening to three different listing agents this past week. Collusion can happen by having a very short list of appraisers on a panel in which the appraisal is ordered by the loan originator.
If this happens to you, your best defense is objective analysis by an appraiser that is not party to any of the players.