What Is Appraised Value?
Many buyers and sellers have asked me to explain “appraised value” of a home. To keep it simple: it’s an objective opinion of value that is performed by a qualified appraiser, but it’s not an exact science so know that appraisals may differ.
For buying and selling purposes, appraisals are usually based on market value—or the amount a property could probably bring if sold in the current real estate market. Note the reference to current…don’t assume an appraisal generated a year ago, or even 6 months ago to be a true representation. An appraised value is not a constant number. Changes in market conditions can have a significant effect (positive or negative) on appraised value. Also, appraised value doesn’t consider special considerations…for example, the need to sell quickly.
During the home buying process the appraisal is performed by a professional appraiser during the mortgage origination process. The appraiser is usually chosen by the lender, but the appraisal is paid for by the borrower. Other types of appraised value may include insurance value, replacement value, and assessed value for property tax purposes.
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