The lender I'm refinancing with chose a trusted third party for my appraisal. It appraised higher than I thought and I might want to sell. How relevant is an appraisal to a buyer? Does fair market value tend to go above or below the appraised value?
And do sellers try to sell above the appraised value? How does one determine what they want to market it at after it's been appraised?
[{"id": "fnqxy49", "text": "Typically appraisals are a vehicle to protect lenders and not only do they tend to be conservative but many I\u2019ve seen are not accurate and use assumptions that are general verses relevant to the specific property type. Sale and rent comparables are often not accurate. I\u2019ve seen both good and bad appraisals. It definitely varies. Typically though I would say appraisals are 70% of fair market value.", "replies": [{"id": "fns270h", "text": "Typically 70% of fair market value? Are you investing in marinas or something with very few transactions?", "replies": [{"id": "fntc75s", "text": "Sorry, I didn\u2019t specify what product type. This is from what I\u2019ve seen of recent appraisals for retail, shopping centers, and net leased properties. Not low volume deals and obviously it\u2019s not ideal to have such a disparity, but majority of appraisals I\u2019ve come across are horrendous. Most likely due to appraisers not typically specializing by product type and knowing the nuances of each.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fnqyeq1", "text": "I had a property appraise at 250% of what I knew I would be able to sell it for. Granted it was a small loan for a small property in a depressed area, but that didn\u2019t give me a whole lot of faith in appraisals.", "replies": [], "depth": 1}, {"id": "fnrgbuo", "text": "I\u2019ve had probably at least 100 appraisals done on my own properties by lenders throughout the years. Only one time did the appraisal ever come back above the lenders initial opinion of the value, which is almost always going to be under the market value.", "replies": [], "depth": 1}, {"id": "fnrx2o9", "text": "Appraisals mean very little in this market.  Use your instincts or try to find a local real estate expert you trust.", "replies": [], "depth": 1}, {"id": "fnuas7u", "text": "Locality and marketing dependent.  The appraisers do not want to overprice used home prices as that gives the seller a different ideal.  Often it is lower or same as contract price.\n\nFor new homes funded by the builder's affiliate it is just the sold price. I have one that the appraisal came out higher than contract thorough skilled negotiations.", "replies": [], "depth": 1}, {"id": "fnuaxw6", "text": "Commercial appraisal consists of sold comps and income approach. The appraisal together with lender can decide which ans to use.", "replies": [], "depth": 1}, {"id": "fo2o61u", "text": "I agree with other comments here that appraisals can vary wildly from likely sale price.  Your question is does this matter to buyer.   I believe answer is sometimes.  Larger transactions and more sophisticated buyers an appraisal matters less.  They will know what they think it is worth.  If yours is smaller deal, this appraisal may be helpful in establishing in buyers mind that this is a reasonable price, or x% below is a good value.  Appraisers frequently ask for any recent appraisals and they get a copy of the purchase agreement.  If you can convince a buyer to pay a price in line with your (high?) appraisal, it may influence opinion of buyer, lender and buyer's appraiser.", "replies": [], "depth": 1}]