This blog post goes out to all the Realtors who have had a deal fall through because the appraised value was below the contract price. Some of you may have even had multiple offers with most offers above the appraised value. If this has happened to you, first and foremost: I feel your pain! You are thinking to yourself, “If I have 4 different buyers willing to pay $400,000, how could the appraiser say that it is only worth $390,000?” Well, there is nothing wrong with that logic. But keep in mind that as appraisers we are tasked with giving our “opinion of value” and that value MUST be supported by facts and market data. We can’t just say that we THINK it is worth $400,000. We have to prove our case supported by facts and market data (aka Comparable sales, listings, and market trends).
Now, I know what you’re thinking, “Aren’t four separate signed contracts considered facts and/or market data?”. Absolutely they are! It is a fact that 4 different buyers are willing to pay $X and this is certainly considered to be data from the market. A good appraiser will take those facts into consideration in his/her analysis.