I showed a home for the third time this morning and after getting back to the office I noticed an email from the Listing Agent. In the body of the message was an explanation and almost defensive posture from the agent. Attached in a PDF format was a copy of an appraisal.
I looked at the appraisal and shared it with my buyer. Guess what, we don't care.
An appraisal isn't a ruling from a court or a law passed by Congress. It isn't and shouldn't be considered a line in the sand when NOT ordered by a lender. In other words, an appraisal done out of the blue means very little to a buyer, especially one that's got cash or who is going Conventional with their loan.
Appraisers don't typically pick up the phone and call each other to compare notes before every appraisal. Buyers who borrow money work with a lender who orders an 'independent' appraisal from a management company. It's important that sellers recognize that their pre-ordered appraisal won't mean a hill of beans when it comes to negotiating. Value is a matter of opinion. And there's only two opinions that matter the most, the buyers and the buyers ordered appraisal. If they aren't on board, then the deal is dead, no matter what the seller or sellers agent/appraiser have to say about it. And don't get me started on the .. "But Zillow said!"
Sometimes in rural areas or subdivisions with very limited sales we run into problems where we cannot find ANY homes that have sold in the last year, two or more. In this case it helps to get an appraisal to "defend" a price, especially if there have been considerable improvements done to the home/property. It's a decent gage and is a way better substitute than shouting from your roof top.. "But I ain't givin my home away!"
An appraiser who works for hire on the behalf of a seller has no underwritten review, no second peek, no fear of being black balled by the management company. In other words, it's possible for an appraiser to appraise a home slightly higher if hired by a seller. This isn't to suggest there's an ethical pattern in question. Not by any means. Appraisers can, and have used the sellers "talk" to more degree in this scenario. When working for the lender, the Appraiser almost NEVER communicates with a seller and his finger pointing at the new toilets and a/c vents up above.
You could hire 3 appraisers and they'd likely all come up with a different value on any one house. This is really why a buyer shouldn't take any one appraisal (from a seller) with absolute certainty.