But My Property Appraised for More?

During a trip to Macy’s some time ago, I bought a fabulous new outfit. I’m a size pudgy petite, so I have to buy when the things are available. Low and behold, weeks later, the outfit was 1⁄2 what I paid. And so it is with appraised values. Sellers often disagree with their agent about value especially if they received a recent higher appraisal. Not so unlike the outfit I bought at Macy’s, appraisals are affected by time.

Appraised Value

The appraised value, in simplest terms, is really an assessment of value based on a snapshot in time. Day-to-day sales can cause property values to fluctuate. Appraisals attempt to turn a subjective opinion into an objective analysis. But we don’t have “cookie cutter” neighborhoods and because most appraisers don’t physically view many of the properties used in their analysis, they rely heavily on input from REALTORS®. Not every appraiser views value in the same way. Remember, the purpose of an appraisal is to establish what a “ready, willing and able” buyer would reasonably pay for the property in an even market (favoring neither buyer nor seller) and when the sale is made at “arm’s length” (the parties are disinterested).

When an appraisal is part of a purchase, the appraiser has a copy of the sales contract. They have written evidence of what a buyer is willing to pay. They look for value to support the sale. As things stay on the market or as prices come down, new sales might trend down. With re-finances, an appraiser makes their analysis based on (usually) their best guess of the properties that are most similar. Appraisals done based on values of sales 3-6 months ago could actually be higher than the current market will bear. Like Macy’s, not many pudgy petites would be willing to pay the same price today as I did a few of months ago because they know the outfit is now cheaper.

A Confusing Situation

We now have a more confusing situation than in a rising market. Prices are trending down in some neighborhoods and changes in appraised values haven’t always caught up. REALTORS® aren’t appraisers but we look at property every day. A busy agent can be trusted to evaluate how your home will fit into the overall market. Remember, our job is to get the most we can for your property. It is our fiduciary duty. So, whether your agent shops in the pudgy petite section or the tall thin aisle, confidence in their ability is key to finding the proper fit between market, buyer and appraisal in today’s confusing marketplace!