Difference Between Market and Appraised Value

Many times buyers and sellers do not fully understand the difference between market value and appraised value.  These two values for a property are generated from two different procedures and may reflect different points in time.  The appraised value is a professional estimate based on prior sales of similar properties.  This estimate normally takes into account the following amenities of each property: square footage, location, construction, and number of stories, etc.  The appraised value is done by a certified appraiser who expresses his or her opinion what the property is worth at that point in time.  If you had multiple appraisals done by different appraisers at the same time, it is very possible you would get different appraise values, but they should be reasonability similar in value.  The appraised value should be a good indicator what the property would sell for on the market.  Now turning to market value, ultimately, the market value is the price a buyer is willing to pay for the property.  Another method used to determine the value of a home is the comparative market analysis (CMA).  This is done by many realtors to assist the seller in determining the listing price for their property.  This procedure compiles sales data of recent sales in the neighborhood.  Sometimes, realtors will include data of active properties on the market to inform the seller of their competition.