That depends on what ‘knowledgeable' is...

I hear grumblings from Realtors every now and again that sound something like this... ‘Why should we have to get an appraisal done when the house is on the open market and there are knowledgeable buyers and sellers who have agreed upon a price?'

 An episode of HGTV's My First Place (entitled ‘Hoping to Persist in Phoenix') summed up my answer.  I can't remember all of the monetary details, but the story goes something like this:

• Couple transfers from the East Coast to Arizona
• Buyers Agent finds them a house within their price range
• Couple is ready to put in an offer
• Buyers Agent in suspicious about the asking price (even after the sellers dropped the price $30,000)
• Buyers Agent makes a contingency to sellers that they pay for an appraisal to be done on the house prior to buyers formally signing purchase agreement to determine market value
• Appraiser's opinion of value was about $35,000 below the price that both the ‘knowledgeable' buyers and sellers were about to agree upon
• Sellers reluctantly drop their price so that a bank will give them a loan

I give grand kudos to the Buyers Agent for seeing this glaring price deficiency before it extended the purchase process for these first time home buyers that were on a time crunch or became a deal killer all together. 

Although this example was based on out-of-town buyers that my not have necessarily been ‘knowledgeable' about the market it is not isolated to transplants.  First time home buyers often do not know what to expect ... sellers will presume that their $80,000 remodel is worth $80,000 more than their neighbors house.... buyers find a house that has ‘special financing qualifications' and simply look at their monthly payment... sellers don't know the market, they only know how much they need to sell their house for...   The list is endless as to why the list price may not be the right price, but the final conclusion will probably be the same... if the buyer wants lender financing, the purchase price needs to be reasonable or the buyers willing to come in with a greater down payment.