What's the Big Deal? Appraisal vs Estimate of Value

Real Estate Agent with Better Homes Gardens/Mason McDuffie DRE#00890955

There is a difference when a Realtor gives you an Estimate of Value, and when an Appraiser gives you an appraisal. Some folks, quite innocently, pay up to $500.00 (by the way, home evaluations from Realtors are free) for an appraisal on their home before they call a Realtor; perhaps as proof of how much their house is REALLY worth to prospective buyers. Guess what, those Buyers will just compare your home with the others on the market, and the ones that have recently sold. That appraisal does not impress Buyers. Once your home has an offer, the lender will order an appraisal to analyze the price of the house. Lenders these days want appraisals coming in at asking price, not over. And they do! As in all financing, the Lender is going to scrutinize both you and the house.

If it is a refi, it is amazing how high the price comes in. How much money do you want?  If it is a new loan, well, how easily the appraisal comes in depends on how much you have made as down payment.  Sounds kind murky, doesn't it?

We, as Realtors, cannot call our estimates appraisals because we are not licensed appraisers, even though we may know more about the house in question, and have probably seen the homes the appraiser is using as comparables and the Appraiser has not. Have an experienced Realtor give you an estimate. A real time, real life estimate. We have visited many homes, and have a real feeling for what buyers want.  Things that stir people emotionally have value, like that rose covered gazebo. The appraiser does not give value to that, but a buyer may. We, as Realtors, deal  in and understand the value of people's emotions.

For up-to-date  news on what home values are really doing in your specific neighborhood, please call us for an information chat.  We would love to talk with you.  We have over 27 years of experience serving folks like you.




Comments (3)

Chuck Christensen
Your Financial Coach - Bellingham, WA
You forgot one thing...a Realtors estimate of value means nothing. A lender is only going to accept an appraisal. The apprasal is the true value...and lenders do love it when it is done before. that shows the lender that the appraiser valued the house accordingly and didn't fudge the figures to make it work for the buyer. It also cuts down the closing time...usually it take a week to order the apprasal, have the appraser set up an appointment and then send the paperwork back to the loan officer, then the loan officer sends it to the underwriter for approval...these days every appraisal is being reviewed. Your comments about refi's and apprasing for what one wants was true last year...but no longer is that the case since WAMU is under investigation for appraisal problems. Countrywide is being investigated for securities fraud. Everyone loves their own home and thinks it is worth more than it really is. An appraser has no attachment to the house. An appraiser is not working on commission, so they will not raise the price to increase their commission, or give someone an overpriced estimate just to get the deal and then when it doesn't sell in a week ask them to lower the price. I will mark your blog so I can comeback to it once a few appraisers see it.
Mar 26, 2008 08:33 AM
Rick Sergison
EXP Realty of Canada Inc., Brokerage - Pickering, ON
Durham Region Real Estate Blog

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Mar 27, 2008 12:47 AM

This is one of the main problems realtors and appraisers dont get along when they should.  Realtors use the price per square foot ratio as appraisers use sold comparable homes.  I cant tell you how many times i have had a realtor.... not a bank or lender ask me for more value on a home.  As an honest appraiser i can tell you that it is unethical to provide anything other than fair market value for a home.  Your job is to determine the most probable selling price of a home not to " make a deal work".  It doesnt matter what a realtor lists the property for, if it doesnt appraise for that amount your not getting the loan. 

 I wish there was a way realtors and appraisers could get on the same page and use the same methods of figuring out value.  As for your comment about the gazeebo.....appraisers do give value to such things.  Just because you didnt see a line item adjustment in the appraisal doesnt mean it wasnt considered.  Every amenity attached to the actual real estate gets value, BUT it only gets contributory value not what you or the buyer/seller think its worth or what you paid for it. 

Mar 27, 2008 04:23 AM