Appraisals Are Opinions of Value NOT Facts of Value..TRUE or FALSE?

Real Estate Broker/Owner with Cam Realty and Property Management

Appraisals Are Opinions of Value NOT Facts of Value..TRUE or FALSE?

What is an appraisal?

In real estate, an appraisal is an opinion of a home’s current market value. The appraisal report is done by a licensed appraiser who’s job is to gather information on the neighborhood, the subject property, and sales in the area. The current value of a home is calculated by the most recent sales.

If it is that simple, why do we see two different suggested values from two different appraisers? Well, appraisals are opinions! Many will argue with this and of course, many will agree.

When a home buyer applies for a mortgage, the lender will order an appraisal as they want to make sure the house is worth the amount of money they are lending. As real estate professionals, when we list properties, we share the most recent sales as well as active/pending listings with the home sellers, then, suggest a list price. Some sellers think their homes are worth a lot more than the professionals’ “suggested list price” and somehow, convince their agents to overprice the home. However, this only causes more headaches down the road unless the potential buyer waives the appraisal contingency.
In 18+ years as a Realtor, I’ve had my fair share of appraisals that came in lower than the agreed sale price between the buyer and the seller. For some odd reason, all of them were FHA loans. In all instances, there were indeed other comparables the appraisers could have used to bring the value up. Again, this shows you an appraisal is a value, not facts of value.
The challenge with FHA appraisals is that they stay with the property for six months. So if an FHA appraisal came in $20,000 lower than the agreed price and the contract was canceled, the sellers would either have to go for another type of financing or reduce the price. Which one do you think the sellers would go for?

Let us think about changing markets. By changing markets, I mean, home prices going up or down at a fast pace. In these instances, I truly believe, the appraisers should take into count the active, pending listings as well as the inventory. Yes, they make a note of the market conditions in their reports but is that fact reflected in their opinion of the price? That’s the million-dollar question!

Nobody who is a party in the transaction wants to see a low appraisal but they do happen. Knowing our next steps as Realtors is the key.

If you are looking to buy or sell a home in the Clermont, Minneola, Groveland, Mascotte, Winter Garden areas, I would love the opportunity to speak with you. Call or text me today at 407-929-1852, email or visit

Appraisals Are Opinions of Value NOT Facts of Value..TRUE or FALSE?


Comments (44)

Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

There are appraisers and appraisers. Some who take the time to research the neighborhood / area and some who make (usually wrong) assumptions about local values. In areas where sales are widely spaced, this is a real problem.


Sep 09, 2020 08:40 PM
Beth Atalay

You are so right Marte Cliff , in my area, it is a real problem and has been going on for a long time.

Sep 10, 2020 07:03 AM
Adam Feinberg
Elegran - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

Appraisals are supposed to be a very analytical process,  incorporating opinions, it really should be a much more involved review of the property. I often find that isn't the case. FHA loans are practically non-existant in my market- so I don't have to deal with that, but like everywhere else, a poorly considered appraisal can still kill a deal.

Sep 09, 2020 09:32 PM
Adam Feinberg

Hi Beth Atalay, Yeah, that is one pain I don't miss, but we have far more to offset the difficulties of FHA loans. We have co-op boards that can reject a buyer and not explain why they rejected the buyer. I also work with restricted sale apartments - usually co-op's, but not entirely. This week I got a condo into contract. We thought it was a market rate apartment, but it turned out it was initially sold with many restrictions - income restricted, sublet restricted,  must be a primary residence (no pied a terres), there was a subsidized mortgage attached to be repaid back to the city that wasn't reflected in the initial purchase, and 50% of profits if sold before the 15 year enforcement was complete- which is the case here. Ultimately after we learned only the no sublet rule remained a restriction once resold (and not enforced in any way), only then could we move forward on the deal. It took 7 1/2 weeks to go from accepted offer to contract. Hopefully we should be able to close in 2-4 months (partially because the city restrictions require review of the actual amounts due to the city for repayment). So while we don't have FHA to contend with- we have lots of other complicated deals that I typically come across.

Sep 10, 2020 10:00 AM
Beth Atalay

Hi Adam Feinberg, you are lucky to be where you are where you don't see FHA loans, they can be a pain for sure.  

Sep 10, 2020 07:02 AM
Richard V. Foster, Esq.
Nevada Perfect Homes - Henderson, NV
Broker (58356) - ABR/M, CREN, CRS, GRI, RRG, SFR

Most important thing to remember, Appraisers give opinions of VALUE, used to secure the loan . . . REALTORS give opinions of PRICE, what the general public is likely to pay. Never make the mistake of confusing value and price.

Sep 09, 2020 10:13 PM
Beth Atalay

Hi Richard V. Foster, Esq., some appraisers' opinion of value is so out of touch, its laughable. 

Sep 10, 2020 07:01 AM
Deidre Pfeifer
First Team Real Estate - Rancho Cucamonga, CA

I listed a property in a resort community for a long time client and the appraisal we received from the buyer was horrific. The appraiser used stale comps, drove 115 miles from the coast to the desert (not familiar with the area), spent less than 14 minutes at the property and submitted an appraisal $30,000 under list. I wrote a rebuttal and submitted more current comps to him, he wouldn’t even consider them. I wrote to the buyers lender to request a second appraisal and the appraisal desk, per the lender (Caliber Home Loans) wouldn’t agree to a second appraisal. My sellers were beside themselves, they came down a little bit but not much. They told the buyer to walk if he couldn’t meet their bottom line.
I am not a fan of out of area appraisers going into areas/communities they know nothing about and documenting opinions of value. If your an appraiser and don’t know something or have questions, call the listing agent, we have facts that can help you. Better yet, if you don’t know the area, don’t take the job.That’s my 2 cents on appraisal’s....thanks for the article Beth.

Sep 10, 2020 03:50 AM
Kris Collis, Associate Broker

Deidre Pfeifer Coincidentally the worst appraisal ever received was also from Caliber Home Loans and also by an out of state appraiser.  Appraiser couldn't be bothered to read the contract for the lot included in sale and did not include outbuildings that list agent physicaly pointed out to him onsite.  When Caliber asked for "better" comps I advised appraiser needed to correct his errors, include all property in sale so "new" comps would not be needed. My new rule, sloppy lenders who dump appraiser'a errors on agents get removed from referral list.

Sep 11, 2020 12:06 AM
Beth Atalay

Hi Deidre Pfeifer, I feel your seller's pain. Most of the appraisers in my area are coming from other counties and clearly not familiar with the local real estate market trends and truly hurt the buyer and the seller. In my 18+ years, I never had an appraiser change his/her value..ever!

Sep 10, 2020 07:00 AM
JoAnn Young
Young & Young Properties - Melbourne, FL
Florida Real Estate

I just had a low appraisal on a 55+ condo listing yesterday.  It was stated in the report that "only"  55+ comps could be used.  I question the "only" part of this report because I have seen several appraisals where comps from non 55+ condos have been used.  The comps on this report were used from "only" that complex which is the only 55+ on the beachside that is not direct oceanfront.  The most weight was given to comp #1 which was 9 months old.  Beth, you are not too far from my market area.  You certainly know that our market is not the same as it was 9 months ago.  

Sep 10, 2020 04:21 AM
Beth Atalay

Hi JoAnn Young, our market has changed drastically within the past three months, yet, some appraisers just bypass that fact. 

Sep 10, 2020 06:57 AM
Jenna Shaughnessy
Jenna Kate at Home LLC - Reading, MA
Inspired Ideas to Make Your House a Home

Couldn't agree more! Certain aspects of the appraisal of course are based on facts, but so much is just opinion. A good appraiser will be in tune with the market trends and be able to appraise accordingly!

Sep 10, 2020 05:38 AM
Beth Atalay

Hi Jenna Shaughnessy, welcome to ActiveRain. Yes, indeed, a good appraiser will be in tune with the market trends and provide their opinion of price based on recent sales and the market trends.

Sep 10, 2020 06:55 AM
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Funny how agents can have vastly different experiences with appraisals.  The majority of the low appraisals in my career have been conventional loans.  Isn't that strange?  Most of the agents in my market advise their sellers shy away from FHA or VA loans as their experience tells them that those are the most likely to appraise low.  

Sep 10, 2020 07:03 AM
Beth Atalay

Hi Chris Ann Cleland, I don't think low appraisals have anything to do do with the type of loan but everything to do with the appraisers who are behind those reports. 

Sep 10, 2020 07:19 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

I find it hard to believe that FHA has a majority of low appraisals because I've had them mostly with minimum down. For some reason the screws get put to the appraisal the less the buyer has to put down - but that's not an appraisal factor is it? More generous with 10% down? 20% down they don't even care.

No one mentioned if they leave comparable sales for the appraisers. I always do along with anything else they would need like floorplans, etc.

Sep 10, 2020 07:56 AM
Beth Atalay

Hi Lyn Sims, the last two appraisals I had were drive-bys, neither one even called me, I didn't know who the appraisers were. The amount of down payment should not matter.

Sep 10, 2020 10:51 AM
Adam Feinberg

I always provide the appraisers with printouts of comparable sales. Some of the appraisers will use it, others will ignore it. I also have a list of facts/details about the apartment and building for the appraiser that they should be factoring in (I certainly do when I working on a listing proposal or working with a buyer).

Sep 10, 2020 11:54 AM
Kris Collis, Associate Broker

Lyn Sims On 20% down some appraisers get sloppy.  Worst appraisal ever was on a 20% conv.  Appraiser couldnd't be bothered to factor in all property in sale including a vacant lot and outbuildings that list agent physically pointed out to him onsite.  When appraisal failed and lender asked for better comps, I advised his selected comps were wong due to appraiser errors of fact. Get their "seasoned" out of state appraiser to correct his errors.  The appraisal went from failed to appraising well over list.

Sep 11, 2020 12:19 AM
Brian England
Vacasa - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

In my mind, it is just an opinion of value and there are often different opinions of value in real estate but no factual value.  Market value is truly whatever a buyer is willing to pay.

Sep 10, 2020 07:58 AM
Beth Atalay

Yes, indeed Brian England. One of my buyer clients who closed eight days ago removed the appraisal contingency and offered over asking price. He did not care to hear what an appraiser would value the home at. 

Sep 10, 2020 10:48 AM
Kris Collis, Associate Broker

Beth, smart move by your buyer esp. in markets of increasing value when sales on the books are not indicative of current value.

Sep 11, 2020 12:31 AM
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

While appraisers have to follow specific rules, and rely heavily on data, as many mention, in the end it's an opinion of value. The same as when we do a CMA - in our opinion, based on the data we have on hand, your house can likely sell for this amount.  However, in this market, many homes are selling over value due to the lack of inventory. Or is it over-value?  That's the big question, as the market often ends up determining the true value to a ready, willing, and able buyer. 

Sep 10, 2020 08:15 AM
Beth Atalay

Hi Debb Janes EcoBroker and Bernie Stea JD, in this constantly changing market, it is really difficult for the appraisers and I understand that. However, they should acknowledge this fact and should be reflected in their opinion of value.

Sep 10, 2020 10:46 AM
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

I didn't know that an FHA appraisal stays with a property for six months!  However, I haven't had a buyer with an FHA loan for a long time--sellers don't like them, esp in this hot market!

Sep 10, 2020 09:13 AM
Beth Atalay

Mary Hutchison, SRES, ABR, unfortunately, they do so if an FHA financing is offered, the next appraiser will be able to see the prior appraisal.  

Sep 10, 2020 10:45 AM
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea

From what I've seen, appraisers are cautious when it comes to an FHA loan, versus, for example, if you ask an appraiser to appraise a home for a seller. Amazing how much higher that appraisal will be. Been there.

Sep 10, 2020 07:21 PM
Hella M. Rothwell, Broker/Realtor®


Sep 13, 2020 12:11 PM
Beth Atalay

Hella M. Rothwell, Broker/Realtor®, one of my seller clients did in fact get an appraisal done prior to listing. The appraisal done for the buyer was $30,000 lower. That should never happen. 

Sep 13, 2020 11:42 AM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland

Sometimes part of the problem with 2 values that are so far apart is that some lenders use appraisers that are not in the direct area of the valuation property.  Have had this issue myself.  When research of the appraiser of the low appraisal, usually lives over an hour or more from the property.  I have often requested a reconsideration and usually get a higher appraisal after that when supervisors get involved. 

Sep 11, 2020 04:55 AM
Beth Atalay

Hi Stella Barbour, great point in my experience, the low appraisals were done by the appraiser from out of the area. 

Sep 13, 2020 11:41 AM
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Thanks for this post Beth! What I hate is when one these services sends in an appraiser from 180 miles away! How can an appraiser from Greensboro NC (an urban area) come to the Southeastern NC (a resort area)an really do a fair appraisal! Don't laugh, it has happened to me!

Sep 11, 2020 04:30 PM
Beth Atalay

Hi Tom Bailey, it has happened to me as well, the appraiser drove over three hours one way. Makes no sense at all as they can't possibly know the market.

Sep 13, 2020 11:40 AM
Raymond Denton
Homesmart / Evergreen Realty - Mission Viejo, CA
Casta del Sol Realtor

Appraisals are 80% mathematics and guidelines, and 20% opinion - that's why 3 appraisals all happening the same day will result in 3 different values.

It's really that simple.

Sep 15, 2020 09:45 AM
Vince Kleinknecht
Kleinknecht Consulting - Zanesville, OH
Discover Your REAL Property Value!

Just remember, "market value" is NOT what someone is willing to pay. A colleague of mine wrote about appraisers and agents and their sometimes adversarial relationship. It's worth 15 minutes of your life to read it..........

Sep 15, 2020 10:25 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Beth Atalay - it is an opinion and a question of the opinion that is accepted by the lender for sure.

Sep 15, 2020 10:42 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great post Beth.  Appraisals can be a tricky animal.  I host green appraiser courses and have sat through the courses (2 days at a time) to make sure I'm on point with my sellers. It's critically important to itemize with both date and amount spent, of all upgrades. Appraisers can't produce value with a number, they need to have facts.  Whether these are green features or upgrades, the process is the  same, UNLESS the home has owned solar panels and items which have reduced energy bills. In those cases, an appraiser would use an income approach.  BUT it's up to the realtor to seek out a qualified appraiser by asking the buyer's lender first if they have a green qualified appraiser on their list. If not, then the list is sent from the appraisal institute site.  That's a whole 'nother blog, that I've actually written on before. 

Sep 22, 2020 05:34 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

I don't mind the difference of opinion in appraisals - it's when the appraiser puts his opinion into the appraisal that makes me a little nuts.  I had an appraiser many years ago tank a sale because he thought sellers in general were making too much money in that market 

Sep 23, 2020 08:21 AM
Beth Atalay

Hi Lise Howe, could you believe the same exact thing happened to me. I met the appraiser at the house and he told me how he felt. 

Sep 23, 2020 08:22 AM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

They often come lower than actual sold price because the lenders need to preserve its assets. In our are I have not seen many offers get accepted under the condition of a loan. Buyers are willing to swallow the difference if it comes lower. It is at least 20% down.

Oct 07, 2020 06:31 AM