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Often times, if the contract price is within the adjust range of the comparable sales, it’s the best indicator of value. A willing buyer and a willing seller meeting at a price. It's not always the case but often that’s the market talking to you.
The appraised value calculates at a range, it's never an exact number.
So if the purchase price falls within that range, the property will be appraised at the purchase price.
It's a common belief that because the buyer pays the appraisal fee, the appraiser is working on their behalf. That's not the case. They are a third party vendor whose primary role is to offer an unbiased valuation of the property.
The appraiser's client is the lender. They employ an appraiser to independently confirm that the loan amount they're considering is appropriate for the property's true market value. A lender wants to make sure that if you default on the loan, they can sell the property for the amount they loaned you.
The benefit for a buyer is peace of mind that you're investing in a property valued correctly in the current market.
An Appraisal IS...
A written estimate of a property’s market value completed by an independent third-party appraiser.
The value is based on market analysis of recent sales for similar properties and properties physical condition.
To make sure the home meets lender minimum property standards.
An Appraisal IS NOT...
The absolute definitive value of a property. The market determines whether or not a property is worth more or less than an appraisal report.
For example, if a property appraises for $1M but not one wants to buy it...is it really worth $1M?
Understanding the appraiser's role helps clarify their position in the home-buying process. It also underlines the importance of selecting a lender that values accurate, comprehensive appraisals over merely the cheapest ones.
More on appraisals and financing contingencies can be found in my Buyer's Guide.
Wendy Monday
Broker,
Onward Real Estate
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615.642.1313
@wendymondaysellingnashville on social
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